Here's Our Take On The Immunomedics Inc (NASDAQ:IMMU) Outcome

We've looked at biotech play Immunomedics, Inc. (NASDAQ:IMMU) a few times this year already, with this March coverage being the most recent example. It's been a pretty wild ride in 2017, with the volatility rooted in a deal inked with Seattle Genetics, Inc. (NASDAQ:SGEN) back in February. The latest development associated with said deal just hit press, and yet again, the company is moving.Here's a look at what's happened and what it means for the company and its shareholders going forward.So, for those that missed the initial coverage, Immunomedics is trying to bring a drug called IMMU-132 to market in a triple negative breast cancer indication. The drug has shown considerable promise throughout early stage trials, and it's currently in a phase II investigating efficacy in said indication. Cash is always an issue at this end of the biotech space and Immunomedics was no exception. It didn’t have enough cash on hand to get beyond the phase II study and – as is often the case – it signed a deal with Seattle that brought with it a cash infusion (to the tune of $250 million) in return for its handing over of the rights to IMMU-132 to Seattle.The cash was very much needed, but the deal also allowed for a 9.9% stake acquisition of Immunomedics by Seattle, priced at $4.90 a share. There were a couple of grievances associated with the deal, but primarily these were the handing over of the rights for what Immunomedics shareholders (as led by an activist fund called VenBio) didn’t think was enough cash and the dilution associated with the $4.90 a share price.VenBio took management to court over the deal and we hypothesized as to what the outcome of this situation might be as part of this piece.The latest news gives us this outcome.Basically, the deal is going to be shelved. Immunomedics will keep the rights to IMMU-132, Seattle will keep its cash, and – as what we might call a perk of the arrangement for the latter – will keep its cheap 9.9% stake.There are a few things worth noting that have arisen on the back of the deal's shelving.First, that Immunomedics is going to have to go it alone with the drug, and that brings with it a capital necessity that the deal (in its original form) lifted. To remedy this, the company has announced a $125 million raise concurrent to the deal dropping announcement – cash that should IMMU- 132 through to at least end phase II (at which point Immunomedics could potentially pick up accelerated approval).Second, that there's basically an entirely fresh team heading up Immunomedics right now. CEO Cynthia L. Sullivan will step down as president, CEO and director, and CFO Michael R. Garone will serve as interim CEO. Additionally, the CSO (and founder) Dr. David M. Goldenberg will step down (although he's going to remain on the board).How this latter team will drive the company forward, and specifically, how this will differ from that of the previous team, remains to be seen. One thing we can say is that VenBio is almost certainly going to be pulling the strings, at least as far as IMMU-132 is concerned, for the foreseeable future.So what's our take on this?Well, while the dilution associated with the initial deal wasn’t great, we actually thought the arrangement was pretty favorable for Immunomedics. With its dissolution, there's now considerably more risk associated with an exposure, and Seattle has a warrant for close to 9 million shares at, exercisable until end-2017, which remains a concern for shareholders.That said, if this drug hits the shelves (and especially if it picks up accelerated approval on the back of phase II data) there's a massive market potential in both the breast cancer indication that it's initially targeting, and beyond, in alternative oncology indications.Bottom line, then, is that this one's now higher risk but if things run smooth through to registration, there's more than enough upside potential to justify the added risk.We will be updating our subscribers as soon as we know more. For the latest updates on IMMU, sign up below!Disclosure: We have no position in IMMU and have not been compensated for this article.