venBio Sends Letter to Immunomedics Stockholders

NEW YORK–(BUSINESS WIRE)– venBio Select Advisor LLC (“venBio”), the beneficial owner of
approximately 10.5 million shares, or 9.9%, of Immunomedics, Inc.
(NASDAQ: IMMU) (“Immunomedics” or the “Company”) and its largest
stockholder, today sent a letter to Immunomedics stockholders in
connection with venBio’s nomination of four highly-qualified candidates
– Scott Canute, Peter Barton Hutt, Dr. Khalid Islam, and Dr. Behzad
Aghazadeh – for election to the Company’s Board of Directors (the
“Board”) at the upcoming 2016 Annual Meeting of stockholders, which is
currently scheduled to be held on February 16, 2017.

The full text of the letter follows:

January 18, 2017

Dear Fellow Stockholders:

You, our fellow stockholders, are charged with deciding between two very
different courses of action at the upcoming 2016 Annual Meeting of
Immunomedics stockholders. Will you vote for
real change that can unlock value for all stockholders, or will you
allow the current leadership of Immunomedics to perpetuate the mistakes
of the past? We strongly urge you to choose the first option.

We believe that decisive change is sorely
needed to correct the course of strategic missteps, mismanagement, and
cronyism that has characterized the management and oversight
of Immunomedics. That is why we have proposed a slate of four
highly-qualified and credentialed nominees who have direct experience in
the specific areas needed to effect change at the Company and unlock
value for all stockholders. This includes experience in pharmaceutical
development and breast cancer, commercial manufacturing and regulatory
issues, pharmaceutical partnering and deal making, and an understanding
of the capital markets. We believe that our
candidates possess these abilities in spades, while the nominees put
forth by Immunomedics do not.

We understand why this has become a contentious situation. However, we
are deeply disappointed that Immunomedics’ recent communications have
contained a number of falsehoods and inaccuracies related to
our efforts to create value for all the Company’s stockholders. This
becomes crystal clear under close examination of some of the Company’s
recent statements. Let’s look at the claims versus the facts.

• Claim: “venBio’s demands for representation and unilateral veto
  rights are especially unreasonable relative to the size of its stake
  in the company.”
• Fact: As venBio’s largest stockholder, our interests are directly
  aligned with investors, which is why we are fighting for truly
  independent representation at the Board level, as evidenced by the
  fact that three of our four nominees are independent of venBio.
  • We believe that the track record of Immunomedics’ current Board
    and management shows they are a direct obstacle to maximizing
    value for all stockholders.
  • Based on this belief, the only way to create value for all
    investors is to remove the obstacles. This requires having
    independent and experienced stockholder representatives on the
    Board in a substantial capacity to directly impact outcomes.
  • There are no second chances in this situation. The right Board and
    leadership are needed not only to achieve a strong partnership
    deal that unlocks the full value of Immunomedics’ IMMU-132 asset,
    but also to oversee the successful execution
    of any deal and the growth of the Company moving forward.
    That is why we believe our slate of highly-qualified and
    experienced candidates are the right choice, at the right time,
    for Immunomedics.
• Claim: “venBio’s actions and stated plans could have unintended
  consequences by triggering statutory and contractual change of control
  provisions…”
• Fact: The Company’s suggestions that venBio’s actions would trigger
  various change in control provisions are flat out wrong, highly
  misleading, and are a transparent attempt to scare stockholders into
  giving them support.
  • Immunomedics states a change in composition of the Board could
    lead to a loss of the Company’s net operating loss carryforwards
    (“NOLs”). The truth is that a change in the Board does NOT
    affect the Company’s NOLs. Merely electing venBio’s nominees has
    nothing to do with the NOLs, as even a minimal tax analysis by the
    Company would have revealed. As part of the Company’s scare
    tactics, they are even willing to mislead stockholders as to the
    actual amount of available NOLs, overstating them by what we
    believe is more than $100 million.¹
  • While the Company correctly notes that equity awards would
    accelerate for employees, what the Company neglects to mention is
    that the current Board has the ability to avoid this situation,
    simply by passing a resolution endorsing venBio’s nominees
    immediately before the date of election for the narrow purpose of
    those agreements. Therefore, ultimately
    triggering accelerated vesting is up to the Board and their
    willingness to act in the best interest of their stockholders.
  • Additionally, the Company states it would be “forc[ed]” into
    making “significant payments of up to $15 million from change of
    control provisions in management employment contracts.” Not only
    are a large portion of such payments avoidable if, as discussed
    above, the incumbent Board endorses venBio’s nominees, but also
    the suggestion here that the Company is not capable of paying the
    golden parachutes that it awarded to management (which at that
    point constituted 40% of the Board) is a perfect example of how
    the Board has completely failed to act as a good fiduciary for all
    stockholders, and exemplifies the degree to which it has focused
    solely on enriching itself. If paying out these golden parachutes
    would have such deleterious effects on the Company, why did the
    Board agree to them or allow the Company to get to be in such bad
    financial straits that they couldn’t afford the payments?
  • To be perfectly clear, venBio is not seeking a “change in control”
    in the way characterized by Immunomedics, and we are not a private
    equity firm engaging in this proxy contest to sell the company or
    take it private. venBio is a New York-based investment manager
    seeking board representation at a company we believe needs change
    in order to benefit all stockholders.
• Claim: “We believe that, the venBio nominees, if elected,
  would delay the progress of IMMU-132 by up to two years…”
• Fact: This claim is completely baseless and false.
  • There is no evidence that changes at the Board level would delay
    approvals for IMMU-132.
  • A delay would only be certain if the Company or its principals
    took intentional steps to harm stockholders, such as through a
    “loss of key personnel in clinical, CMC, regulatory, science, and
    administration.” This is more of a threat than an indication of
    what would happen—at no point would a change in composition of the
    Board necessarily lead to a loss in key personnel. So again,
    Immunomedics is relying on threatening its own stockholders with
    negative outcomes that could only be guaranteed by self-sabotage
    on the part of the existing Board and management.
  • If our campaign is successful, our goal would be to ensure
    employee continuity, and we would strive to help the hard-working
    and loyal employees of Immunomedics reach the financial and
    scientific successes they deserve. This shared success across the
    organization is in stark contrast to the self-enrichment policies
    characterizing how the current management and Board have operated.
• Claim: “venBio rejected [. . .] alternative proposals, stating that
  it will not back down from its full demands.”
• Fact: The Company claims we were unreasonable in settlement
  negotiations when we have negotiated in good faith.
  • We completely disagree with the Company’s attempts to paint us as
    unreasonable negotiators. We negotiated in good faith under agreed
    confidentiality and made a counter proposal at the invitation of
    the Company’s advisors. In stark contrast, the Company
    unilaterally ended negotiations the night after soliciting our
    proposal for resolving this situation, unilaterally determined to
    make public details of the negotiations in what we believe is a
    jaded fashion and while now claiming to be open to compromise,
    turned around and suddenly nominated a slate of directors.
• Claim: “In fact, our newly appointed Vice Chairman and future
  Chairman, Jason Aryeh, was initially sought out by venBio as a
  potential candidate for the venBio slate of nominees.”
• Fact: We never asked Jason Aryeh to join our slate of nominees.
  • While we discussed Immunomedics informally with Jason Aryeh prior
    to deciding to take action at the Company, we
    never offered Mr. Aryeh a position on our slate of nominees.
  • In fact, not only did venBio never offer Mr. Aryeh a place on our
    slate, on not one but several occasions we made it clear to the
    Company, its financial advisors and Mr. Aryeh himself that we
    would not find him to be a suitable board candidate or Chairman
    for Immunomedics. We made clear this was due to his lack of
    sufficient scientific, regulatory or pharmaceutical manufacturing
    expertise – key areas of need for the Company at this time.
  • As a result, we take issue with the statement in the Company’s
    press release that they believe that “venBio must implicitly
    support Mr. Aryeh. » For all the reasons stated above, this
    assumption is inaccurate. Let us be
    explicit: we do not support Mr. Aryeh as a director or Chairman
    for Immunomedics.
  • On a related note, we are surprised that despite having engaged a
    search firm and ostensibly conducting a search “process” for
    potential directors, Immunomedics has put forth a slate of
    individuals who are highly interconnected
    and who in several cases have existing relationships with each
    other and the Company’s advisors from prior enterprises.
• Claim: “…they shockingly don’t even want to allow any stockholders
  besides them to have the right to vote on any strategic transaction.”
• Fact: This statement is designed to confuse stockholders and belies
  a complete misunderstanding of how pharmaceutical partnership deals
  are forged.
  • It is the norm for partnership deals to be voted on by a company’s
    board but not be subject to a full vote of all stockholders. This
    is because, unlike in an M&A transaction, potential partners
    predominantly are not amenable to negotiating for a transaction
    that will be atypically opened to the unnecessary delay and
    uncertainty of a shareholder vote process.
  • The Company falsely suggests that a Board comprised of our
    nominees would vote on such a deal as a means for us to control
    any transaction. This repeats the false implication that we are
    seeking control of the Company when in fact venBio will only have
    one nominee on the Board.

Ultimately, we want what is best for all stockholders, and we believe
our extremely well-qualified nominees have what it takes to achieve
this. The bottom line is that the slate of
nominees proposed by Immunomedics represents the same cronyism and lack
of credibility that have characterized the Company’s leadership to date.
This slate is comprised of individuals who are highly interconnected and
would lack the independence needed to improve corporate governance and
enhance oversight of management. Furthermore, they lack the important
skills and experience needed to reach a deal to maximize the value of
IMMU-132 or to understand the complexities of assessing potential
offers. As we have made clear, we believe the following areas of
expertise are needed in a slate of nominees for the Board of
Immunomedics:

• Pharmaceutical Development Background and Breast Cancer Expertise
• Commercial Manufacturing Expertise
• Regulatory Expertise
• Good Management Skills and Corporate Governance Know-How
• Pharmaceutical Partnering/Deal Making Experience
• Capital Markets Expertise

Our highly-qualified nominees – Scott Canute, Peter Barton Hutt, Dr.
Khalid Islam, and me – collectively satisfy all of these requirements
and would be well-placed to work to the benefit of all Immunomedics
stockholders.

Now is the time for change at Immunomedics in
order to maximize the value of the Company’s assets, especially
IMMU-132, and take steps to end the array of strategic missteps and
failures at the Company. We strongly
urge you to support our four nominees for the Board in order to build
true and lasting value for all stockholders.

Vote FOR all four of our Nominees on the GOLD
Proxy Card Today.

Sincerely,

Dr. Behzad Aghazadeh

About venBio Select Advisor LLC

venBio Select Advisor LLC (“venBio Select”) is the SEC registered
investment manager for venBio’s public markets strategy and its main
equity investment vehicle – the venBio Select Fund – which primarily
invests across the biotechnology and therapeutics sector. The venBio
Select Fund is managed by Dr. Behzad Aghazadeh, supported by a team of
seasoned professionals with advanced medical and scientific backgrounds,
and extensive investment experience in the biopharmaceutical industry.
The investment and business operations for venBio Select are based in
New York. venBio’s separate venture capital team operates and manages
their funds from San Francisco, partnering with industry leaders to
build biotechnology companies with a focus on novel therapeutics for
unmet medical needs.

About the Proxy Solicitation

venBio Select Advisor LLC, Behzad Aghazadeh, Scott Canute, Peter Barton
Hutt and Khalid Islam (collectively, the “Participants”) have filed with
the Securities and Exchange Commission (the “SEC”) a definitive proxy
statement and accompanying form of proxy to be used in connection with
the solicitation of proxies from the stockholders of Immunomedics (the
“Company”). All stockholders of the Company are advised to read the
definitive proxy statement and other documents related to the
solicitation of proxies by the Participants, as they contain important
information, including additional information related to the
Participants. The definitive proxy statement and an accompanying proxy
card is being furnished to some or all of the Company’s stockholders and
is, along with other relevant documents, available at no charge on the
SEC website at http://www.sec.gov/
or from Okapi Partners at 212-297-0720 or info@okapipartners.com.

Information about the Participants and a description of their direct or
indirect interests by security holdings is contained in the definitive
proxy statement on Schedule 14A filed by the Participants with the SEC
on December 6, 2016. This document is available free of charge from the
sources indicated above.

Warning Regarding Forward Looking Statements

THIS PRESS RELEASE CONTAINS FORWARD LOOKING STATEMENTS. FORWARD LOOKING
STATEMENTS CAN BE IDENTIFIED BY USE OF WORDS SUCH AS « OUTLOOK »,
« BELIEVE », « INTEND », « EXPECT », « POTENTIAL », « WILL », « MAY », « SHOULD »,
« ESTIMATE », « ANTICIPATE », AND DERIVATIVES OR NEGATIVES OF SUCH WORDS OR
SIMILAR WORDS. FORWARD LOOKING STATEMENTS IN THIS PRESS RELEASE ARE
BASED UPON PRESENT BELIEFS OR EXPECTATIONS. HOWEVER, FORWARD LOOKING
STATEMENTS AND THEIR IMPLICATIONS ARE NOT GUARANTEED TO OCCUR AND MAY
NOT OCCUR AS A RESULT OF VARIOUS RISKS, REASONS AND UNCERTAINTIES.
EXCEPT AS REQUIRED BY LAW, VENBIO AND ITS AFFILIATES AND RELATED PERSONS
UNDERTAKE NO OBLIGATION TO UPDATE ANY FORWARD LOOKING STATEMENT, WHETHER
AS A RESULT OF NEW INFORMATION, FUTURE DEVELOPMENTS OR OTHERWISE.

¹ venBio’s legal analysis shows that Immunomedics’ claim of
$397.2 million of income that can be offset by NOLs is $108.5 million
greater than the true number, $288.7 million. The $108.5 million
discrepancy simply constitutes state tax NOLs—those NOLs that offset the
same income as the $288.7mm of the Federal NOLs, just in a smaller
amount.

Image may be NSFW.
Clik here to view.

View source version on businesswire.com: http://www.businesswire.com/news/home/20170118006202/en/