UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2004

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission File Number: 0-12104

Immunomedics, Inc.

(Exact name of Registrant as specified in its charter)

Delaware	61-1009366
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

300 American Road, Morris Plains, New Jersey 07950

(Address of principal executive offices) (Zip Code)

(973) 605-8200

(Registrant’s Telephone Number, Including Area Code)

Former Name, Former Address and Former Fiscal Year,

If Changed Since Last Report: Not Applicable

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).    Yes  x    No  ¨

The number of shares of the Registrant’s common stock outstanding as of February 4, 2005 was 54,073,059.

IMMUNOMEDICS, INC.

TABLE OF CONTENTS

		Page No.
PART I:	FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS:
	Consolidated Balance Sheets as of December 31, 2004 (unaudited) and June 30, 2004	3
	Consolidated Statements of Operations and Comprehensive Loss for the Three Months and Six Months Ended December 31, 2004 (unaudited) and 2003 (unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2004 (unaudited) and 2003 (unaudited)	5
	Notes to Unaudited Consolidated Financial Statements	6
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	15
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	22
ITEM 4.	CONTROLS AND PROCEDURES	23
PART II:	OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	23
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	24
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	24
ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	24
ITEM 5.	OTHER INFORMATION	25
ITEM 6.	EXHIBITS	25
SIGNATURES		26

2

ITEM 1. FINANCIAL STATEMENTS

IMMUNOMEDICS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	December 31, 2004			June 30, 2004
	(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	7,006,298		$	9,133,297
Marketable securities		10,023,718			4,345,891
Accounts receivable, net of allowance for doubtful accounts of $283,175 and $343,724, at December 31, 2004 and June 30, 2004, respectively		691,517			788,647
Inventory, net of reserve		127,990			340,133
Other current assets		1,336,576			748,921
Restricted securities- current portion		1,275,200			1,275,200
Total current assets		20,461,299			16,632,089
Property and equipment, net of accumulated depreciation of $14,142,738 and $13,195,552, at December 31, 2004 and June 30, 2004, respectively		10,895,911			11,532,646
Restricted securities		3,188,000			3,825,600
Other long-term assets		59,592			98,243
	$	34,604,802		$	32,088,578
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Current portion of long-term debt	$	1,275,200		$	1,275,200
Accounts payable and accrued expenses		4,645,807			5,021,513
Total current liabilities		5,921,007			6,296,713
Long-term debt		13,188,000			13,825,600
Minority interest		321,421			382,121
Commitments and Contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value; authorized 10,000,000 shares; no shares issued and outstanding at December 31, 2004 and June 30, 2004		—			—
Common stock, $0.01 par value; authorized 70,000,000 shares; issued and outstanding, 54,073,059 and 49,893,693 shares at December 31, 2004 and June 30, 2004, respectively		540,730			498,937
Capital contributed in excess of par		173,417,147			159,493,859
Treasury stock, at cost, 34,725 shares		(458,370	)		(458,370	)
Accumulated deficit		(158,862,826	)		(148,257,745	)
Accumulated other comprehensive income		537,693			307,463
Total stockholders’ equity		15,174,374			11,584,144
	$	34,604,802		$	32,088,578

See accompanying notes to unaudited consolidated financial statements.

3

IMMUNOMEDICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE LOSS

	Three Months Ended December 31,						Six Months Ended December 31,
	2004			2003			2004			2003
	(unaudited)
Revenues:
Product sales	$	796,092		$	932,232		$	1,858,785		$	1,737,052
License fee and other revenues		136,015			74,639			188,929			405,960
Research and development		67,143			49,999			67,143			100,000
Total revenues		999,250			1,056,870			2,114,857			2,243,012
Costs and Expenses:
Costs of goods sold		159,360			143,698		$	325,499		$	272,669
Research and development		6,253,047			5,236,145			11,519,976			10,505,499
Sales and marketing		206,639			248,362			424,675			608,754
General and administrative		1,233,424			824,707			2,012,123			1,550,424
Total costs and expenses		7,852,470			6,452,912			14,282,273			12,937,346
Operating loss		(6,853,220	)		(5,396,042	)		(12,167,416	)		(10,694,334	)
Litigation settlement		—			—			1,111,750			—
Interest and other income		94,724			136,953			179,030			310,441
Interest expense		(106,783	)		(18,969	)		(208,729	)		(38,871	)
Minority interest		35,579			20,930			60,700			43,986
Foreign currency transaction gain (loss)		(108,166	)		41,549			(31,773	)		8,998
Loss before income tax		(6,937,866	)		(5,215,579	)		(11,056,438	)		(10,369,780	)
Income tax benefit		581,445			357,737			451,357			329,037
Net loss	$	(6,356,421	)		(4,857,842	)	$	(10,605,081	)	$	(10,040,743	)
Per share data (basic and diluted):
Net loss	$	(0.12	)	$	(0.10	)	$	(0.20	)	$	(0.20	)
Weighted average number of common shares outstanding		54,073,059			49,883,193			53,300,955			49,882,378
Comprehensive income (loss):
Net loss	$	(6,356,421	)	$	(4,857,842	)	$	(10,605,081	)	$	(10,040,743	)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments		155,034			124,408			178,327			152,391
Unrealized gain (loss) on securities available for sale		(11,074	)		(115,327	)		51,903			(188,101	)
Other comprehensive income (loss)		143,960			9,081			230,230			(35,710	)
Comprehensive loss	$	(6,212,461	)	$	(4,848,761	)	$	(10,374,851	)	$	(10,076,453	)

See accompanying notes to unaudited consolidated financial statements.

4

IMMUNOMEDICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Six Months Ended December 31,
	2004			2003
	(unaudited)
Cash flows from operating activities:
Net loss	$	(10,605,081	)	$	(10,040,743	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation		947,186			1,025,603
Minority interest		(60,700	)		(43,986	)
Provision for allowance for doubtful accounts		(60,549	)		(32,164	)
Inventory reserve		47,000			—
Amortization of bond premium		81,503			125,680
Non-cash expense relating to issuance of stock options		—			53,220
Changes in operating assets and liabilities		(601,887	)		1,340,797
Other		178,327			—
Net cash used in operating activities		(10,074,201	)		(7,571,593	)
Cash flows from investing activities:
Purchases of marketable securities		(6,941,475	)		(249,977	)
Proceeds from sales and maturities of marketable securities		1,871,647			3,670,706
Purchases of property and equipment		(310,451	)		(548,020	)
Net cash used in investing activities		(5,380,279	)		2,872,709
Cash flows from financing activities:
Issuance of common stock, net of transaction costs		13,961,019			—
Exercise of stock options		4,062			8,900
Payments of debt		(637,600	)		(637,600	)
Net cash provided by financing activities		13,327,481			(628,700	)
Net increase (decrease) in cash and cash equivalents		(2,126,999	)		(5,327,584	)
Cash and cash equivalents, beginning of period		9,133,297			13,601,627
Cash and cash equivalents, end of period	$	7,006,298		$	8,274,043

See accompanying notes to unaudited consolidated financial statements.

5

IMMUNOMEDICS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

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 June 30, 2004, which contains our audited consolidated financial statements and the notes thereto.

1. Business Overview and Basis of Presentation

The accompanying unaudited consolidated financial statements of Immunomedics, which incorporate our majority-owned subsidiaries, have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, the statements do not include all of the information and footnotes required by U.S. generally accepted accounting principles 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 necessary for a fair presentation of the results for such interim periods have been included. The balance sheet at June 30, 2004 has been derived from the Company’s audited 2004 consolidated financial statements. Operating results for the six-month period ended December 31, 2004 are not necessarily indicative of the results that may be expected for the full fiscal year ending June 30, 2005, or any other period.

The Company has never achieved profitable operations on an annual basis and there is no assurance that profitable operations, if achieved, could be sustained on a continuing basis. Further, its ability to achieve profitability will depend on numerous factors, including, without limitation, the following:

• the Company’s ability to identify compounds with therapeutic value, and then conduct and complete clinical trials for such product candidates on a timely basis;

• the Company’s ability to comply with all applicable federal, state and foreign legal requirements, including, without limitation, those promulgated by the U.S. Food and Drug Administration;

• the Company’s ability to obtain additional financial resources on commercially acceptable terms or at all; and

• many other factors associated with the commercial development of therapeutic products outside of the Company’s control.

Since inception in 1982, the Company has relied primarily upon the private and public sale of its equity securities and of its convertible debt securities, to fund operations. It has also received limited revenues from research and development alliances and, more recently, from commercial sales of two diagnostic imaging products. The Company believes that its existing resources should be sufficient to meet its capital and liquidity requirements for at least the next twelve months, after taking into consideration a reduction of discretionary spending if necessary. There can be no assurance that it will be able to obtain additional capital when needed on acceptable terms, if at all.

6

2. Summary of Significant Accounting Policies

Principles of Consolidation and Presentation

The consolidated financial statements include the accounts of Immunomedics and its majority-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Minority interest is recorded for a majority-owned subsidiary.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates.

Foreign Currencies

For subsidiaries outside of the United States that operate in a local currency environment, income and expense items are translated to United States dollars at the monthly average rates of exchange prevailing during the year, assets and liabilities are translated at the period-end exchange rates, and equity accounts are translated at historical exchange rates. Translation adjustments are accumulated in a separate component of stockholders’ equity in the Consolidated Balance Sheets and are included in the determination of comprehensive income in the Consolidated Statements of Stockholders’ Equity. Transaction gains and losses are included in the determination of net income in the Consolidated Statements of Operations and Comprehensive Income (Loss).

Cash Equivalents, Marketable Securities and Restricted Securities

The Company considers all highly liquid investments with original maturities of three months or less, at the time of purchase, to be cash equivalents.

Immunomedics’ investments in cash equivalents, marketable securities and restricted securities are classified as securities that are available for sale. The portfolio at December 31, 2004 primarily consisted of corporate debt securities and municipal bonds.

Concentration of Credit Risk

Cash, cash equivalents, marketable securities and restricted securities are financial instruments that potentially subject the Company to concentration of credit risk. Immunomedics invests its cash in debt instruments of financial institutions and corporations with strong credit ratings. The Company has established guidelines relative to diversification and maturities that are designed to help ensure safety and liquidity. These guidelines are periodically reviewed to take advantage of trends in yields and interest rates. The Company has historically held the investments to maturity. However, the Company has the ability to sell these investments before maturity and has therefore classified the investments as available for sale. The Company has never experienced any significant losses on investments.

7

Inventory

Inventory is stated at the lower of average cost (which approximates first-in, first-out) or market, and includes materials, labor and manufacturing overhead. As of December 31, 2004 the inventory balance consisted of finished goods.

Property and Equipment

Property and equipment are stated at cost and are depreciated on a straight-line basis over the estimated useful lives (5-10 years) of the respective assets. Leasehold improvements are capitalized and amortized over the lesser of the life of the lease or the estimated useful life of the asset. The Company reviews long-lived assets for impairment whenever events or changes in business circumstances occur that indicate that the carrying amount of the assets may not be recoverable. The Company assesses the recoverability of long-lived assets held and to be used based on undiscounted cash flows, and measures the impairment, if any, using discounted cash flows.

Revenue Recognition

Payments received under contracts to fund certain research activities are recognized as revenue in the period in which the research activities are performed. Payments received in advance that are related to future performance are deferred and recognized as revenue when the research projects are performed. Upfront, nonrefundable fees associated with license and development agreements where the Company has continuing involvement in the agreement are recorded as deferred revenue and recognized over the estimated service period. If the estimated service period is subsequently modified, the period over which the upfront fee is recognized is modified accordingly on a prospective basis. Revenues from the achievement of research and development milestones are recognized when the milestones are achieved.

Revenue from the sale of diagnostic products is recorded when there is persuasive evidence that an arrangement exists, delivery has occurred, the price is fixed and determinable and collectability is reasonably assured. Allowances, if any, are established for uncollectible amounts, estimated product returns and discounts.

Research and Development Costs

Research and development costs are expensed as incurred.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities relate to the expected future tax consequences of events that have been recognized in the Company’s consolidated financial statements and tax returns. A valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Income taxes are provided for profitable foreign jurisdictions at the applicable tax rate.

Benefits received resulting from the sale of our New Jersey state net operating losses (“NOL”) are recognized as a tax benefit when the NOL is approved for sale by the state of New Jersey. During the quarters ended December 31, 2004 and 2003, the Company realized benefits of approximately $591,000 and $428,000, respectively, as a result of the New Jersey state program.

Net Loss Per Share Allocable to Common Stockholders

Net loss per basic and diluted common share allocable to common stockholders is based on the

8

net loss for the relevant period, divided by the weighted-average number of common shares outstanding during the period. For purposes of the diluted net loss per common share calculations, the exercise or conversion of all potential common shares is not included because their effect would have been anti-dilutive, due to the net loss recorded for the six-month periods ended December 31, 2004 and 2003. The common stock equivalents excluded from the diluted per share calculation are 4,975,000 and 4,357,750 shares at December 31, 2004 and 2003, respectively.

Comprehensive Loss

Comprehensive loss consists of net loss, net unrealized gains (losses) on securities available for sale and certain foreign exchange changes and is presented in the Consolidated Statements of Operations and Comprehensive Loss.

Stock-Based Compensation

Immunomedics applies the intrinsic value-based method of accounting prescribed by Accounting Principles Board (“APB”) Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations, in accounting for its fixed plan stock options. As such, compensation expense would be recorded on the date of grant only if the then-current market price of the underlying stock exceeded the exercise price. Statement of Financial Accounting Standards (“SFAS”) No. 123, Accounting for Stock-Based Compensation, established accounting and disclosure requirements using a fair value-based method of accounting for stock-based employee compensation plans. As allowed by SFAS No. 123, the Company has elected to continue to apply the intrinsic value-based method of accounting described above, and has adopted the disclosure requirements of SFAS No. 123.

Had the Company determined compensation cost based on the fair value at the grant date consistent with the provisions of SFAS No. 123, the Company’s net loss allocable to common stockholders and related per share amounts would have been the pro forma amounts indicated below:

	Three Months Ended December 31,						Six Months Ended December 31,
	2004			2003			2004			2003
Net income (loss), as reported	$	(6,356,421	)	$	(4,857,842	)	$	(10,605,081	)	$	(10,040,743	)
Add: Stock-based employee compensation expense		—			26,610			—			53,220
Deduct: Total stock–based employee compensation expense determined under fair value based method for all awards		(1,510,190	)		(2,127,742	)		(3,102,357	)		(4,251,626	)
Pro forma net loss	$	(7,866,661	)	$	(6,958,974	)	$	(13,707,438	)	$	(14,239,149	)
Loss per share:
-as reported	$	(0.12	)	$	(0.10	)		(0.20	)	$	(0.20	)
-pro forma	$	(.015	)	$	(0.14	)		(0.26	)	$	(0.29	)

Recent Accounting Pronouncements

Share –Based Payments

In December 2004, the Financial Accounting Standards Board (FASB) issued SFAS No. 123 (revised 2004), Share-Based Payment (SFAS 123R). SFAS 123R replaced SFAS No. 123, Accounting for Stock-Based Compensation (SFAS 123), and superseded Accounting Principles Board Opinion

9

No. 25, Accounting for Stock Issued to Employees (APB 25). SFAS 123R will require compensation cost related to share-based payment transactions to be recognized in the financial statements. As permitted by SFAS 123, Immunomedics elected to follow the guidance of APB 25, which allowed companies to use the intrinsic value method of accounting to value their share-based payment transactions with employees. Based on this method, Immunomedics did not recognize compensation expense in its financial statements as the stock options granted had an exercise price equal to the fair market value of the underlying common stock on the date of the grant. SFAS 123R requires measurement of the cost of share-based payment transactions to employees at the fair value of the award on the grant date and recognition of expense over the requisite service or vesting period. SFAS 123R allows implementation using a modified version of prospective application, under which compensation expense for the unvested portion of previously granted awards and all new awards will be recognized on or after the date of adoption. SFAS 123R also allows, but does not require, companies to restate the full fiscal year 2005 to reflect the impact of expensing shared-based payments under SFAS 123R. At this time the Company has not made a decision as to which alternative it may select. The Company is in the process of determining how the new method of valuing stock-based compensation will impact its financial statements. This statement will be effective for financial statements relating to fiscal periods beginning after June 15, 2005.

3. Marketable Securities and Restricted Securities

Immunomedics utilizes SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities, to account for investments in marketable securities. Under this accounting standard, securities for which there is not the positive intent and ability to hold to maturity are classified as available-for-sale and are carried at fair value. Unrealized holding gains and losses, which are deemed to be temporary, on securities classified as available-for-sale are classified as a separate component of accumulated other comprehensive loss. Immunomedics considers all of its current investments to be available-for-sale. Marketable securities and restricted securities at December 31, 2004 and June 30, 2004 consist of the following ($ in thousands):

	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Estimated Fair Value
December 31, 2004
Municipal Bonds/Agency	$	9,270	$	13	$	(47	)	$	9,236
Corporate Debt Securities		5,196		57		(2	)		5,251
	$	14,466	$	70	$	(49	)	$	14,487
June 30, 2004
Municipal Bonds/Agency	$	7,365	$	—	$	(73	)	$	7,292
Corporate Debt Securities		2,101		56		(2	)		2,155
	$	9,466	$	56	$	(75	)	$	9,447

Restricted securities at December 31, 2004 and June 30, 2004 of approximately $4,463,200 and $5,100,800, respectively, are included in the table above. There is approximately $12,000 in changes in unrealized gains at December 31, 2004.

10

4. Property and Equipment

Property and equipment consists of the following ($ in thousands):

	December 31, 2004			June 30, 2004
Machinery and equipment	$	5,596		$	5,314
Leasehold improvements		17,353			17,337
Furniture and fixtures		781			781
Computer equipment		1,309			1,297
		25,039			24,729
Accumulated depreciation and amortization		(14,143	)		(13,196	)
	$	10,896		$	11,533

5. Geographic Segments

Immunomedics manages its operations as one line of business of researching, developing, manufacturing and marketing biopharmaceutical products, particularly antibody-based diagnostics and therapeutics for cancer, autoimmune and infectious diseases, and it currently reports as a single industry segment. Immunomedics markets and sells its products in the United States and throughout Europe. No product sales from a single customer exceeded 10% of consolidated product sales.

The following table presents financial information based on the geographic location of the facilities of Immunomedics for the three and six-month periods ended December 31, 2004 (in thousands):

	December 31, 2004
Three Months Ended	United States			Europe		Total
Total assets	$	31,322		$	3,283	$	34,605
Property and equipment, net		10,891			5		10,896
Revenues		298			701		999
Income (loss) before tax benefit		(7,069	)		131		(6,938	)
	December 31, 2003
Three Months Ended	United States			Europe		Total
Total assets	$	33,491		$	2,941	$	36,432
Property and equipment, net		11,815			6		11,821
Revenues		265			792		1,057
Income (loss) before tax benefit		(5,548	)		332		(5,216	)

11

	December 31, 2004
Six Months Ended	United States			Europe		Total
Revenues	$	437		$	1,678	$	2,115
Income (loss) before tax benefit		(11,607	)		551		(11,056	)
	December 31, 2003
Six Months Ended	United States			Europe		Total
Revenues	$	753		$	1,490	$	2,243
Income (loss) before tax benefit		(10,794	)		424		(10,370	)

6. Related Party Transactions

Certain of the Company’s affiliates, including members of senior management and its Board of Directors, as well as their respective family members and other affiliates, have relationships and agreements among themselves as well as with the Company and its affiliates, that create the potential for both real, as well as perceived, conflicts of interest. These include Dr. David M. Goldenberg, the Chairman of the Board of Directors and Chief Strategic Officer, Ms. Cynthia L. Sullivan, the President and Chief Executive Officer, and certain companies with which the Company does business, including the Center for Molecular Medicine and Immunology (“CMMI”). Dr. Goldenberg and Ms. Sullivan are husband and wife. For a description of these relationships and transactions, see the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2004 and the notes to the audited financial statements contained therein.

The Company reimbursed CMMI for expenses incurred on behalf of Immunomedics, including amounts incurred pursuant to research contracts, in the amount of approximately $27,000 and $47,000 for the six-month periods ended December 31, 2004 and 2003, respectively. It also provides to CMMI, at no cost, laboratory materials and supplies. However, any inventions made independently of the Company at CMMI are the property of CMMI.

During the six-month periods ended December 31, 2004 and 2003, the Board of Directors authorized grants to CMMI of $3,000 and $194,000, respectively, to support research and clinical work being performed at CMMI, such grants to be expended in a manner deemed appropriate by the Board of Trustees of CMMI.

For each of the six-month periods ended December 31, 2004 and 2003, Dr. Goldenberg received $27,500 in compensation for his services to IBC Pharmaceuticals, Inc., a Delaware corporation and a majority-owned subsidiary of the Company (“IBC”). The Company owns approximately 74% of the capital stock of IBC. Dr. Goldenberg owns approximately 18% of the capital stock of IBC, and the remaining 8% of IBC is held by various third parties, some of whom are adult members of Dr. Goldenberg’s family, as to which shares Dr. Goldenberg disclaims beneficial ownership.

IBC reimbursed Immunomedics for $206,000 and $552,000 of its research activities in the six-month periods ended December 31, 2004 and 2003, respectively, which were conducted on IBC’s behalf. The unreimbursed research activities as of December 31, 2004 ($1,315,000) is noted as an unsecured demand promissory note to Immunomedics at an interest note of 1% above LIBOR. The unsecured demand promissory note and related interest are eliminated in consolidation.

12

7. License and Distribution Agreements

In June 2002, the Company granted a non-exclusive license to Daiichi Pure Chemicals Co. under Immunomedics’ carcinoembryonic antigen (CEA) patents. The Company recorded a royalty of $111,000 and $86,000 for the six-month periods ended December 31, 2004, and 2003, respectively, as “License fee and other revenues” under that license.

In September 2003 the Company recorded $275,000 as license fees and other revenues for the costs incurred relating to the manufacture of materials supplied to Amgen Inc. as part of a development and licensing agreement, which has since expired.

In September 2004 a patent infringement suit with Cytogen, Inc. and C.R. Bard was settled for an undisclosed amount without any admission of fault or liability. In connection with the settlement, the Company settled legal fees associated with the suit with the attorneys representing it in the case. For the quarter ended September 30, 2004, the Company recorded a litigation settlement gain in the amount of $1,111,750, which includes the reversal of legal fees previously accrued for this patent suit. The specific amount of the settlement, however, is undisclosed in accordance with the terms of the parties’ settlement agreement.

8. Debt

In January 2004, the Company completed a $10,000,000 financing of Convertible Senior Notes, which are due January 12, 2006. The notes bear interest at a fixed annual rate of 3.25% to be paid semiannually in arrears in cash or stock at the Company’s option, beginning in July 2004. The holder of the notes may convert the notes at any time prior to the maturity date into shares of the Company’s common stock at a conversion price of $6.09 per share. Immunomedics has filed a registration statement under the Securities Act of 1933, as amended (the “Securities Act”), with the Securities and Exchange Commission for registration of the notes and the shares of common stock issuable upon conversion of the notes. Proceeds from the financing are being used to continue the Company’s development of its cancer and autoimmune disease therapeutics and for working capital and other general corporate purposes. At December 31, 2004, the Company’s indebtedness under this financing was $10,000,000, which will mature on January 12, 2006, unless earlier converted or repurchased. For the six-month periods ended December 31, 2004 and 2003, the Company incurred interest expense of approximately $162,500 and $0, respectively.

In May 2003, Immunomedics completed a $6,376,000 bond financing with the New Jersey Economic Development Authority, pursuant to which Immunomedics was able to refinance its capital investment in a new manufacturing facility at a rate of interest below that which would have otherwise been available. The interest rate on the bonds was approximately 2.44% at December 31, 2004. In connection with this financing, Immunomedics granted certain security interests to the New Jersey Economic Development Authority with respect to its properties and assets, and agreed to become subject to certain customary affirmative as well as restrictive covenants, none of which it believes will affect its business or operations in any material respect. In addition, the bonds are subject to mandatory redemption, if the fair value of the Company’s collateralized assets falls below the outstanding loan balance. The Company’s collateral is recorded as restricted securities in the balance sheet. Restricted securities include highly liquid, marketable securities. At December 31, 2004, the Company’s indebtedness under this financing was approximately $4,463,000 due in equal monthly installments over the next 45 months. For the six-month periods ended December 31, 2004 and 2003, the Company incurred interest expense of approximately $46,000 and $39,000, respectively. Interest and principal payments are due monthly.

13

9. Stockholders Equity

In August 2004, the Company sold 4,178,116 shares of its common stock, resulting in net proceeds to the Company of approximately $14.0 million. The shares were sold to institutional investors at a price of $3.61 per share. The Company also agreed to sell to each such investor a like number of shares of its common stock at a price of $3.97 per share, which rights to purchase expired on November 24, 2004. The shares of common stock were sold pursuant to an effective shelf registration statement filed with the Securities and Exchange Commission.

10. Commitments and Contingencies

The Company has brought suit in The Netherlands against F. Hoffmann-La Roche and its Roche Diagnostics subsidiary and European affiliates (“Roche”) for infringement of the Company’s patent covering specific anti-CEA antibodies. The suit sought an injunction against the sale of CEA immunoassays by Roche that infringe our European patents, as well as damages for past infringement. Roche has denied infringement and countered with nullity actions in The Netherlands and Germany, seeking to invalidate our Dutch and German patents. We believe that the patents referred to are valid and those that are the subject of our infringement action have been infringed, and we believe that the Company will prevail in the litigation, although no assurances can be given in this regard. To the extent that Roche contests or challenges our patents, or files appeals or further nullity actions, there can be no assurance that significant costs for defending such patents may not be incurred.

In May 2004 and July 2004, Roche filed nullity actions in German and United Kingdom courts, respectively, challenging our patents relating to an improved method of disease therapy in combination with cytotoxic agents, wherein cytokines are used to prevent, mediate or reverse radiation-induced, drug-induced or antibody-induced toxicity, especially to hematopoietic cells. On December 1, 2004, the Company agreed to settle the United Kingdom patent litigation by surrendering the patent. In accordance with United Kingdom rules, Roche has made an application for payment of its attorney’s fees and other costs to the court. The court has not yet considered this application. We have estimated a range of costs for the probable resolution of this matter. There is no amount within this range that is a more accurate estimate than any other amount, therefore the minimum amount of the range has been accrued and is included in the General and Administrative expenses in the Statement of Operations. If this matter is ultimately settled at the maximum potential recovery, the additional accrual of such costs would not have a material effect on operating results and financial condition. In the German action, the Company is defending the patent with amended claims.

11. Subsequent Event

At a Meeting held on February 3, 2005, the Board of Directors of Immunomedics, Inc. (the “Company”) unanimously approved an acceleration of vesting of all Company stock options with an option price greater than $3.71, the closing price on the NASDAQ Stock Market on such date, (the “Acceleration”). The Acceleration is effective for stock options outstanding as of December 31, 2004. As a result of the Acceleration, approximately 1.9 million options or 39% of the total outstanding options with varying remaining vesting schedules became immediately exercisable. This action was taken in order to avoid expense recognition in future financial statements upon adoption of FAS 123R and resulted in the Company not being required to recognize share-based compensation expense, net of taxes, of approximately $3.7 million in 2006, $2.0 million in 2007 and $.8 million in 2008, based on valuation calculations using the Black-Scholes methodology. The estimated $3.7 million amount for 2006 is based on the assumption that the Company would apply the expense recognition provisions of FAS 123R beginning July 1, 2005.

14

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Note Regarding Forward-Looking Statements

The Securities and Exchange Commission encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. Certain statements that we may make from time to time, including, without limitation, statements contained in this Quarterly Report on Form 10-Q, constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be made directly in this Quarterly Report, and they may also be made a part of this Quarterly Report by reference to other documents filed with the Securities and Exchange Commission, which is known as “incorporation by reference.”

Words such as “may,” “anticipate,” “estimate,” “expects,” “projects,” “intends,” “plans,” “believes” and words and terms of similar substance used in connection with any discussion of future operating or financial performance, identify forward-looking statements. All forward-looking statements are management’s present expectations of future events and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include, among other things: our inability to further identify, develop and achieve commercial success for new products and technologies; the possibility of delays in the research and development necessary to select drug development candidates and delays in clinical trials; the risk that clinical trials may not result in marketable products; the risk that we may be unable to successfully finance and secure regulatory approval of and market our drug candidates; our dependence upon pharmaceutical and biotechnology collaborations; the levels and timing of payments under our collaborative agreements; uncertainties about our ability to obtain new corporate collaborations and acquire new technologies on satisfactory terms, if at all; the development of competing diagnostic and therapeutic products; our ability to protect our proprietary technologies; patent-infringement claims; risks of new, changing and competitive technologies and regulations in the United States and internationally; and other factors discussed under the heading “Factors That May Affect Our Business and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2004, which has been filed with the Securities and Exchange Commission.

In light of these assumptions, risks and uncertainties, the results and events discussed in the forward-looking statements contained in this Quarterly Report or in any document incorporated by reference might not occur. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this Quarterly Report or the date of the document incorporated by reference in this Quarterly Report. We are not under any obligation, and we expressly disclaim any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable law. All subsequent forward-looking statements attributable to Immunomedics or to any person authorized to act on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section.

Overview

Immunomedics is a biopharmaceutical company focused on the development of monoclonal, antibody-based products for the targeted treatment of cancer, autoimmune and other serious diseases. We have developed a number of advanced proprietary technologies that allow us to create humanized antibodies that can be used either alone in unlabeled or “naked” form, or conjugated with radioactive

15

isotopes, chemotherapeutics or toxins, in each case to create highly targeted agents. Using these technologies, we have built a pipeline of therapeutic product candidates that utilize several different mechanisms of action. We believe that our portfolio of intellectual property, which includes approximately 90 issued patents in the United States, and more than 250 other issued patents worldwide, protects our product candidates and technologies.

In addition to our potential therapeutic discoveries, our proprietary technologies have also enabled us to develop highly specific diagnostic imaging agents, one of which, CEA-Scan^®, has been approved in the United States, Canada and the European Union, where it is currently being marketed for the detection of colorectal cancers. Our second diagnostic product, LeukoScan^®, has been approved in Europe, Australia, Canada and the Middle East where it is currently being marketed for the detection of bone infections. The sale of diagnostic imaging agents is not a critical part of our business; however, these diagnostic products provide revenues that offset a portion of our expenditures on our therapeutic product candidates.

From inception in 1982 until December 31, 2004, we had an accumulated deficit of approximately $158.9 million and have never earned a profit in any fiscal year. In the absence of increased revenues from the sale of current or future products and licensing activities (the amount, timing, nature or source of which cannot be predicted), our losses will continue as we continue to conduct our research and development activities. These activities are budgeted to expand over time and will require further resources if we are to be successful. As a result, our operating losses are likely to be substantial over the next several years.

Research and Development

As of December 31, 2004, we employed 22 professionals in our research and development departments. In addition to salaries and benefits, the other costs associated with research and development include the costs associated with producing biopharmaceutical compounds, laboratory equipment and supplies, the costs of conducting clinical trials, legal fees and expenses associated with pursuing patent protection, as well as facilities costs.

Subsequent to the fiscal quarter ended December 31, 2004 we received notice from the U.S. Food and Drug Administration (FDA) that we have received Fast Track Product designation for epratuzumab for the treatment of patients with moderate to severe systemic lupus erythematosus (SLE). A designated fast track drug may be considered for priority review, with a shortened review time, rolling admission and accelerated approval if applicable. As a result we anticipate an increase in research and development expenses, once additional financing is obtained in the coming quarters as we are in preparation for registration trials with epratuzumab in patients with SLE.

Critical Accounting Policies

Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles, which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates. The following discussion highlights what we believe to be the critical accounting policies and judgments made in the preparation of these consolidated financial statements.

Revenue Recognition

Contract revenue from collaborative research agreements is recorded when earned based on the performance requirements of the contract. Revenue from non-refundable upfront license fees and certain

16

guaranteed payments where we continue involvement through collaborative development are deferred and recognized as revenue over the period of continuing involvement. We estimate the period of continuing involvement based on the best available evidential matter available to us at each reporting period. If our estimated time frame for continuing involvement changes, this change in estimate could impact the amount of revenue recognized in future periods.

Revenue from product sales is recorded when there is persuasive evidence that an arrangement exists, delivery has occurred, the price is fixed and determinable and collectability is reasonably assured. Allowances, if any, are established for uncollectible amounts, estimated product returns and discounts. Since allowances are recorded based on management’s estimates, actual amounts may be different in the future.

Foreign Currency Risks

Since we operate in countries outside of the United States, we are exposed to various foreign currency risks. Two specific risks arise from the nature of the contracts we execute with our customers since from time to time contracts are denominated in a currency different than our subsidiary’s local currency. These risks are generally applicable only to a portion of the contracts executed by our foreign subsidiaries. The first risk occurs as revenue recognized for products or services rendered is denominated in a currency different from the currency in which our subsidiary’s expenses are incurred. As a result, our subsidiary’s earnings can be affected by fluctuations in exchange rates. Historically, fluctuations in exchange rates from those in effect at the time contracts were executed have not had a material effect upon our consolidated financial results.

The second risk results from the passage of time between the invoicing of customers and affiliates under these contracts and the ultimate collection of customer payments against such invoices. Because the contract is denominated in a currency other than the subsidiary’s local currency, we recognize a receivable at the time of invoicing for the local currency equivalent of the foreign currency invoice amount. Changes in exchange rates from the time the invoice is prepared and payment from the customer is received will result in our receiving either more or less in local currency than the local currency equivalent of the invoice amount at the time the invoice was prepared and the receivable established. This difference is recognized by us as a foreign currency transaction gain or loss, as applicable, and is reported in other expense (income) in our Consolidated Statements of Operations and Comprehensive Income (Loss).

Finally, our consolidated financial statements are denominated in U.S. dollars. Accordingly, changes in exchange rates between the applicable foreign currency and the U.S. dollar will affect the translation of each foreign subsidiary’s financial results into U.S. dollars for purposes of reporting our consolidated financial results. The process by which each foreign subsidiary’s financial results are translated into U.S. dollars is as follows: income statement accounts are translated at average exchange rates for the period; balance sheet asset and liability accounts are translated at end of period exchange rates; and equity accounts are translated at historical exchange rates. Translation of the balance sheet in this manner affects the stockholders’ equity account, referred to as the cumulative translation adjustment account. This account exists only in the foreign subsidiary’s U.S. dollar balance sheet and is necessary to keep the foreign balance sheet stated in U.S. dollars in balance. To date, such cumulative translation adjustments have not been material to our consolidated financial position.

Stock-Based Compensation

We grant stock options to our employees at an exercise price equal to the fair value of the underlying shares of common stock at the date of grant and account for these stock option grants in accordance with APB Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations. Under APB Opinion No. 25, when stock options are issued with an exercise price equal to the market price of the underlying stock on the date of grant, no compensation expense is recognized in the income statement. However, for purposes

17

of disclosure only, we estimate the fair value of stock options through the use of option-pricing models. In determining the values to use in our option-pricing model, we make several subjective estimates about the characteristics of the underlying stock and the expected timing of option exercise. Changes to these estimates can change the fair value disclosures in our financial statements.

Impairment of Assets

We review our long-lived assets for impairment, when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based upon our judgment of our ability to recover the asset from the expected future undiscounted cash flows of the related operations. Actual future cash flows may be greater or less than estimated.

Results of Operations

Our results for any interim period, such as those described in the following analysis, are not necessarily indicative of the results for the entire fiscal year or any other future period.

Three-Month Period Ended December 31, 2004 Compared to 2003

Revenues

Revenues for the three-month period ended December 31, 2004 were $999,000, as compared to $1,057,000 for the same period in 2003, representing a decrease of $58,000, or 5%. Product sales for the three-month period ended December 31, 2004 were $796,000, as compared to $932,000 for the same period in 2003, representing a decrease of $136,000, or 15% which was due to lower sales of diagnostic imaging products in Europe. License fee and other revenues of $136,000 for the three-month period ended December 31, 2004 increased $61,000 from $75,000 for the same period in 2003. Research and development revenues for the three-month period ended December 31, 2004 was $67,000 as compared to $50,000 for the same period of 2003.

Costs and Expenses

Total cost and expenses for the three-month period ended December 31, 2004 were $7,852,000, as compared to $6,453,000 for the same period in 2003, representing an increase of $1,399,000 or 22%. Research and development expenses for the three-month period ended December 31, 2004 were $6,253,000 as compared to $5,236,000 for the same period in 2003, representing an increase of $1,017,000 or 19%. This expense growth resulted primarily from increased spending for process validation, production activity for clinical trials as well as increased drug toxicity studies. Cost of goods sold for the three-month period ended December 31, 2004 was $159,000 as compared to $144,000 for the same period in 2003. Sales and marketing expenses for the three-month period ended December 31, 2004 decreased $41,000 from $248,000 to $207,000 for the same period in 2003, a result of the decision to de-emphasize the diagnostic imaging product line. General and administrative costs were $1,233,000 for the three-month period ended December 31, 2004, an increase of $408,000 from $825,000 for the same period of 2003, primarily due to higher legal expenses and personnel costs.

Interest Income

Interest and other income of $95,000 for the three-month period ended December 31, 2004 decreased by $42,000 from $137,000 for the same period in 2003, primarily due to lower rates of return on cash and reduced amount of cash available for investments.

18

Interest Expense

Interest expense for the three-month periods ended December 31, 2004 and 2003, was approximately $107,000 and $19,000, respectively. The interest expense for the three-month period ended December 31, 2004 was incurred in connection with the $6,376,000 bond financing with the New Jersey Economic Development Authority, which was completed in May 2003, and the issuance of $10,000,000 aggregate principal amount of convertible senior notes, which was completed in January 2004. See Note 8 to our consolidated interim financial statements included in this Quarterly Report on Form 10-Q.

Foreign Currency Transactions Gain (Loss)

Foreign currency transaction loss for the three-month period ended December 31, 2004 was $108,000 as compared to a gain of $42,000 for the same period in 2003. This increase resulted primarily from currency fluctuations.

Operating Results

Net loss for the three-month period ended December 31, 2004 was $6,356,000 or $0.12 per share, as compared to $4,858,000, or $0.10 per share, for the same period in 2003. The increase of the net loss in 2004 as compared to the net loss in the comparable period in 2003 resulted primarily from increased research and development spending.

Six-Month Period Ended December 31, 2004 Compared to 2003

Revenues

Revenues for the six-month period ended December 31, 2004 were $2,115,000, as compared to $2,243,000 for the same period in 2003, representing a decrease of $128,000, or 6%. Product sales for the six-month period ended December 31, 2004 were $1,859,000, as compared to $1,737,000 for the same period in 2003, representing an increase of $122,000, or 7% which was due to increased sales of diagnostic imaging products in Europe, primarily in the first quarter. License fee and other revenues of $189,000 decreased $217,000 from $406,000 in 2003, which included the last payment received from the Amgen Agreement, ($275,000). Research and development revenues for the six-month period ended December 31, 2004 was $67,000 as compared to $100,000 for the same period of 2003, due to the timing of grant programs.

Costs and Expenses

Total cost and expenses for the six-month period ended December 31, 2004 were $14,282,000, as compared to $12,937,000 for the same period in 2003, representing an increase of $1,345,000 or 10%. Research and development expenses for the six-month period ended December 31, 2004 were $11,520,000 as compared to $10,506,000 for the same period in 2003, an increase of $1,014,000 or 10%. This expense growth resulted primarily from increased spending for process validation, production activity for clinical trials as well as increased drug toxicity studies. Cost of goods sold for the six-month period ended December 31, 2004 increased to $325,000 from $273,000 for the same period in 2003. Sales and marketing expenses for the six-month period ended December 31, 2004 decreased $184,000 from $609,000 to $425,000, a result of the continuing effort to de-emphasize the diagnostic imaging product line. General and administrative costs were $2,012,000 for the six-month period ended December 31, 2004, an increase of $462,000 from $1,550,000 for the same period of 2003, primarily due to higher legal expenses and personnel costs.

19

Litigation Settlement

In September 2004 a patent infringement suit with Cytogen, Inc. and C.R. Bard was settled for an undisclosed amount without any admission of fault or liability. In connection with the settlement, the Company settled legal fees associated with the suit with the attorneys representing it in the case. For the quarter ended September 30, 2004, the Company recorded in other income a litigation settlement gain in the amount of $1,111,750, which includes the reversal of legal fees previously accrued for this patent suit. The specific amount of the settlement, however, is undisclosed in accordance with the terms of the parties’ settlement agreement.

Interest Income

Interest and other income of $179,000 for the six-month period ended December 31, 2004 decreased by $131,000 from $310,000 for the same period in 2003, primarily due to lower rates of return on cash and reduced amount of cash available for investments.

Interest Expense

Interest expense for the six-month periods ended December 31, 2004 and 2003, was approximately $209,000 and $39,000, respectively. The interest expense for the six-month period ended December 31, 2004 was incurred in connection with the $6,376,000 bond financing with the New Jersey Economic Development Authority, which was completed in May 2003, and the issuance of $10,000,000 aggregate principal amount of convertible senior notes, which was completed in January 2004. See Note 8 to our consolidated interim financial statements included in this Quarterly Report on Form 10-Q.

Foreign Currency Transactions Gain (Loss)

Foreign currency transaction loss for the six-month period ended December 31, 2004 was $32,000 as compared to a gain of $9,000 for the same period in 2003. This increase resulted primarily from currency fluctuations.

Operating Results

Net loss for the six-month period ended December 31, 2004 was $10,605,000 or $0.20 per share, as compared to $10,041,000, or $0.20 per share, for the same period in 2003, as increased research and development expenses were offset by the transactions relating to the settlement of the Cytogen, Inc. patent settlement discussed above.

Liquidity and Capital Resources

At December 31, 2004, we had working capital of $14,540,000, representing an increase of $4,205,000 from $10,335,000 at June 30, 2004. At December 31, 2004, we had long-term debt of $10,000,000 aggregate principal amount of convertible senior notes, (which are due January 12, 2006) and $4,463,000 through the New Jersey Economic Development Authority. The net increase in working capital resulted principally from the issuance of common stock in August 2004, which resulted in approximately $14,000,000 in net proceeds to the Company. This was partially offset by the net loss allocable to common stockholders during the six-month period ended December 31, 2004 of $10,605,000 and capital expenditures of $310,000.

20

In August 2004, we sold 4,178,116 shares of common stock, resulting in net proceeds to the Company of approximately $14.0 million. The shares were sold to institutional investors at a price of $3.61 per share.

On January 20, 2004, we completed a $10,000,000 financing of Convertible Senior Notes, which are due January 12, 2006. The notes bear interest at a fixed annual rate of 3.25% to be paid semiannually in arrears in cash or stock at the Company’s option. The holder of the notes may convert the notes at any time prior to the maturity date into shares of the Company’s common stock at a conversion price of $6.09 per share. Immunomedics has filed a registration statement under the Securities Act with the Securities and Exchange Commission for registration of the notes and the shares of common stock issuable upon conversion of the notes. Proceeds from the financing are being used to continue the Company’s development of its cancer and autoimmune disease therapeutics and for working capital and other general corporate purposes.

Our cash, cash equivalents and marketable securities amounted to $17,030,000 at December 31, 2004, representing an increase of $3,551,000 from $13,479,000 at June 30, 2004. This increase was primarily attributable to the proceeds from the sale of common stock, partially offset by the funding of operating expenses and capital expenditures. It is anticipated that working capital and cash, cash equivalents and marketable securities will decrease during fiscal year 2005 as a result of planned operating expenses and capital expenditures, offset in part by projected revenues from sales of our diagnostic imaging products in the United States and Europe. However, there can be no assurance as to the amount of revenues, if any, these imaging products will generate.

To date, we have not generated positive cash flow from operations, excluding the effects of the up-front payment received from Amgen in fiscal year 2001. We believe that our existing working capital should be sufficient to meet our capital and liquidity requirements for at least the next twelve months, after taking into consideration a reduction of discretionary spending if necessary.

Actual results could differ materially from our expectations as a result of a number of risks and uncertainties, including the risks described in Item 1, “Factors That May Affect Our Business and Results of Operations,” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2004 and in other statements included herein. Our working capital and working capital requirements are affected by numerous factors and such factors may have a negative impact on our liquidity. Principal among these are the success of product commercialization and marketing products, the technological advantages and pricing of our products, the impact of the regulatory requirements applicable to us and access to capital markets that can provide us with the resources when necessary to fund our strategic priorities.

With the recent approval from the FDA for Fast Track Product designation of epratuzumab for the treatment of patients with moderate to severe SLE, we anticipate an increase in cash used in operations as compared to amounts used during the fiscal year ended 2004. We will require additional financing to complete our research and development programs for clinical trials of our product candidates and for regulatory filings, as well as to service our debt repayment commitments subsequent to December 31, 2005. However, this additional financing may not be available to us on terms we find acceptable, if at all, and the terms of such financing may cause substantial dilution to existing stockholders. If adequate funds are not available, we may be required to curtail significantly one or more of our research and development programs. If we obtain funds through collaborative partnerships, we may be required to relinquish rights to certain of our technologies or product candidates.

We are actively pursuing various financing alternatives as market conditions permit through additional debt or equity financings and through collaborative marketing and distribution agreements. We continue to evaluate various programs to raise additional capital and to seek additional revenues from the licensing of our proprietary technologies. At the present time, we are unable to determine whether any of these future activities will be successful and, if so, the terms and timing of any definitive agreements.

21

Contractual Commitments

Our major contractual obligations relate to an operating lease for our facility, a loan from the New Jersey Economic Development Authority used to fund the expansion of our facility and the issuance of convertible senior notes. We have identified and quantified the significant commitments in the following table for the fiscal years ending June 30:

Payments Due by Period

(in thousands)

Contractual Obligation	2005		2006		2007		2008		2009		Thereafter		Total
Operating Lease(1)	$	272	$	545	$	552	$	556	$	556	$	9,098	$	11,579
NJEDA Loan(2)	$	665	$	1,317	$	1,301	$	1,284	$	—	$	—	$	4,567
Convertible Senior Notes(3)	$	163	$	10,325	$	—	$	—	$	—	$	—	$	10,488
TOTAL	$	1,100	$	12,187	$	1,853	$	1,840	$	556	$	9,098	$	26,634

(1) Our operating lease for our Morris Plains, New Jersey facility expires in October 2021 and has a base annual rate of $545,000. The rent is fixed for the first five years, which commenced in November 2001, and increases every five years thereafter.

(2) In May 2003, we obtained a loan for $6,376,000 at a variable interest rate through the New Jersey Economic Development Authority, repayable monthly in 60 equal installments.

(3) In January 2004, we completed a $10,000,000 financing through the issuance of convertible senior notes due January 12, 2006. The notes bear interest at a fixed annual rate of 3.25% to be paid semiannually in arrears in cash or stock at the Company’s option.

Effects of Inflation

We do not believe that inflation has had a material impact on our business, sales or operating results during the periods presented.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The following discussion about our exposure to market risk of financial instruments contains forward-looking statements under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those described due to a number of factors, including uncertainties associated with general economic conditions and conditions impacting our industry. See “Cautionary Note Regarding Forward-Looking Statements” under Item 2 above.

Our holdings of financial instruments are comprised primarily of corporate debt securities and municipal bonds. All such instruments are classified as securities available for sale at December 31, 2004. We do not invest in portfolio equity securities or commodities or use financial derivatives for trading purposes. Our debt security portfolio represents funds held temporarily pending use in our business and operations. We manage these funds accordingly. We seek reasonable assuredness of the safety of principal and market liquidity by investing in rated fixed income securities while at the same time seeking to achieve a favorable rate of return. Our market risk exposure consists principally of exposure to changes in interest rates. Our holdings also are exposed to the risks of changes in the credit quality of issuers. We typically invest in highly liquid debt instruments with fixed interest rates.

22

The table below presents the principal amounts of the restricted and unrestricted marketable securities and the related weighted-average interest rates by fiscal year of maturity for our investment portfolio as of December 31, 2004:

	2005			2006			2007			2008	2009	Total			Fair Value
	(in thousands)
Fixed rate	$	8,014		$	3,321		$	3,131		—	—	$	14,466		$	14,487
Average interest rate		1.64	%		3.19	%		1.72	%	—	—		2.01	%		—

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures. Our principal executive officer and principal financial officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q, have concluded that, based on such evaluation, our disclosure controls and procedures were adequate and effective to ensure that material information relating to us, including our consolidated subsidiaries, was made known to them by others within those entities.

In designing and evaluating our disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objective, and our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

(b) Changes in Internal Controls. There were no significant changes in our internal control over financial reporting, identified in connection with the evaluation of such internal control that occurred during our last fiscal quarter, that have materially affected, or are reasonable likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

F. Hoffmann-LaRoche

On December 22, 2003, the Dutch Supreme Court, in a case brought by the Company, held that Immunomedics’ Dutch part of its European patent for highly specific monoclonal antibodies against the cancer marker, carcinoembryonic antigen (CEA), was valid. The Company’s claim of infringement was not finally decided by the Dutch Supreme Court. Among other things, the Supreme Court held that the Court of Appeal which had ruled that Roche had infringed Immunomedics European Patent had not given Roche sufficient opportunity to comment on an expert opinion filed by Immunomedics in which it was stated that Roche’s CEA test kit did satisfy a criterion that is generally satisfied for specific antibodies that bind to CEA. The Company has argued that the Dutch court should enforce the European Patent for all European countries for which the European Patent was validated, since Roche sold the same product in each country. The Dutch Supreme Court repeated the reasoning of the Dutch District Court that the

23

Brussels Convention should be interpreted to permit cross-border enforcement of European patents where a related group of companies sells the same product in countries where that same patent has been validated. The Dutch Supreme Court referred this issue to the European Court of Justice (ECJ) to provide a final interpretation of the Brussels Convention on this point. Subsequent to the fiscal quarter, on January 27, 2005, the ECJ heard oral arguments in the case, and took the matter under consideration.

We believe that the CEA patents that are the subject of our infringement action have been infringed, and we believe that the Company will prevail in the litigation, although no assurances can be given in this regard. To the extent that Roche contests or challenges our patents, or files appeals or further nullity actions, there can be no assurance that significant costs for defending such patents may not be incurred.

On May 19, 2004 and July 20, 2004, Roche filed nullity actions in German and United Kingdom courts, respectively, challenging our patents relating to an improved method of disease therapy in combination with cytotoxic agents, wherein cytokines are used to prevent, mediate or reverse radiation-induced, drug-induced or antibody-induced toxicity, especially to hematopoietic cells. On December 1, 2004, the Company agreed to settle the United Kingdom patent litigation by surrendering the patent. Roche has made an application for payment of its attorney’s fees and other costs to the court. The court has not yet considered this application. We have estimated a range of costs for the probable resolution of this matter. There is no amount within this range that is a more accurate estimate than any other amount, therefore the minimum amount of the range has been accrued and is included in the General and Administrative expenses in the Statement of Operations. If this matter is ultimately settled at the maximum potential recovery, the additional accrual of such costs would not have a material effect on operating results and financial condition. In the German action the Company is defending the patent with amended claims.

There were no other legal proceedings nor any material developments during the fiscal quarter ended December 31, 2004 in any of the legal proceedings described in Item 3 of our Annual Report on Form 10-K for the fiscal year ended June 30, 2004.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS

Our 2004 Annual Meeting of Stockholders was held on December 1, 2004. A quorum of 51,319,258 shares of our common stock (out of a total of 54,073,059 shares entitled to vote, or 94.9%) was represented at the meeting in person or by proxy. The following matters were voted upon:

1. The following persons were elected to our Board of Directors until the 2005 Annual Meeting of Stockholders and until their respective successors have been elected and qualified, or until their earlier death, resignation or removal: Dr. David M. Goldenberg, Cynthia L. Sullivan, Dr. Morton Coleman, Dr. Marvin E. Jaffe, Brian A. Markison, Mary E. Paetzold and Richard R. Pivirotto. The votes were cast as follows:

Name	For	Against	Withheld	Broker Non-Vote
Dr. David M. Goldenberg	50,369,818	939,440	-	-
Cynthia L. Sullivan	50,380,206	939,052	-	-
Dr. Morton Coleman	50,404,544	914,714	-	-
Dr. Marvin E. Jaffe	50,435,149	884,109	-	-
Brian A. Markison	50,466,359	852,899	-	-
Mary E. Paetzold	50,442,449	876,809	-	-
Richard R. Pivirotto	50,357,964	961,294	-	-

24

2. A proposal to ratify the appointment of Ernst & Young LLP as our independent auditors for the fiscal year ending June 30, 2005. The votes were cast as follows:

For:	50,535,216
Against:	697,462
Abstain:	86,580
Broker Non-Vote	0

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

31.1	Certification of Chief Executive Officer Pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.
32.1	Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

25

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	IMMUNOMEDICS, INC.
February 8, 2005	By:	/s/ Cynthia L. Sullivan
		Cynthia L. Sullivan
		President and Chief Executive Officer
		(Principal Executive Officer)
February 8, 2005	By:	/s/ Gerard G. Gorman
		Gerard G. Gorman
		Vice President, Finance, and Chief Financial Officer
		(Principal Financial and Accounting Officer)

26