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, are intended to 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 obtain additional capital through strategic collaborations, licensing, convertible debt securities or equity financing in order to continue our research and development programs as well as 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 products; our ability to protect our proprietary technologies; patent-infringement claims; and risks of new, changing and competitive technologies and regulations in the United States and internationally; and other factors discussed under the heading Item 1A "Risk Factors" in this Quarterly Report on Form 10-Q.

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 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 137 issued patents in the United States, and more than 300 other issued patents worldwide, protects our product candidates and technologies.

The development and commercialization of successful therapeutic products is subject to numerous risks and uncertainties including, without limitation, the following:

• the type of therapeutic compound under investigation and nature of the disease in connection with which the compound is being studied;

• our ability, as well as the ability of our partners, to conduct and complete clinical trials on a timely basis;

• the time required for us to comply with all applicable federal, state and foreign legal requirements, including, without limitation, our receipt of the necessary approvals of the U.S. Food and Drug Administration, or FDA;

• the financial resources available to us during any particular period; and

• many other factors associated with the commercial development of therapeutic products outside of our control.

See Risk Factors in Item 1A of this Quarterly Report.

Research and Development

As of September 30, 2009, we employed 18 professionals in our research and development departments and 21 professionals in our pre-clinical and clinical research 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.

At any one time our scientists are engaged in the research and development of multiple therapeutic compounds. Because we do not track expenses on the basis of each individual compound under investigation, but rather aggregate research and development costs for accounting purposes, it is not possible for investors to analyze and compare the expenses associated with unsuccessful research and development efforts for any particular fiscal period, with those associated with compounds that are determined to be worthy of further development. This may make it more difficult for investors to evaluate our business and future prospects.

Critical Accounting Policies

Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles, which requires 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

We account for revenue arrangements that include multiple deliverables, which addresses how to determine whether an arrangement involving multiple deliverables contains more than one unit of accounting. We concluded that the License and Collaboration Agreement, or the Nycomed Agreement, with Nycomed GmbH, and the Development, Collaboration and License Agreement dated May 9, 2006 with UCB, S.A., or the UCB Agreement, should be accounted for as a single unit of accounting.

We were amortizing the $40 million payment received as part of the Nycomed Agreement over the original expected obligation period, which was December 2009. The expected completion of the obligation period was revised to March 2010, due to slower than anticipated patient enrollment in the ITP clinical trials and will result in approximately $2.4 million of lower license fee revenues for the three-month period ended September 30, 2009, or approximately $0.03 earnings per share. If the obligation period estimate should change in the future, whether due to delays or acceleration of the Nycomed's requirements, this may affect the amortization period.

We also concluded that the $38 million payment received from UCB should be amortized over the expected obligation period of the UCB Agreement, which was initially estimated to end in November 2009. During the 2007 fiscal year, UCB decided to stop further new patient enrollment into the Systemic Lupus Erythematosus, or SLE, clinical trials designed and initiated by us. UCB decided to establish new protocols under which new clinical trials for the treatment of SLE would be conducted and subsequently terminated the then existing SLE clinical trials that had been designed and initiated by us. During the 2008 fiscal year, UCB established new protocols under which new clinical trials for the treatment of SLE would be conducted. UCB subsequently terminated the then existing SLE clinical trials that had been designed and initiated by Immunomedics. UCB initiated a Phase IIb dose ranging study in patients with SLE during the 2008 fiscal year. On August 27, 2009, UCB reported positive results of its Phase IIb clinical study of epratuzumab for treatment of patients with SLE. The data demonstrated clinically meaningful effect with the treatment advantage of epratuzumab over placebo reaching 24.9% at week twelve. A total of 227 patients were enrolled in this study, with 30% of the patients having moderate disease activity and 70% of the patients having severe disease activity in multiple organ systems.

As a result of the UCB decision to terminate the two Phase III SLE trials, initiated by us, we were no longer able to determine how these decisions will impact the obligation period for our remaining potential manufacturing responsibilities under the terms of the agreement with UCB. Accordingly, beginning in the third quarter of fiscal 2007, we ceased amortizing to revenue the deferred revenue recorded with the receipt of the up front payments from UCB at the inception of the license agreement until such time as the obligation period was reasonably determinable.

Under the terms of the UCB Agreement, UCB is solely responsible for the development, manufacturing and commercialization of epratuzumab for the treatment of all autoimmune indications and for the continuation of ongoing clinical trials in SLE, and we were responsible for supplying epratuzumab for the completion of clinical trials relating to SLE, the Sjogren's Phase II Clinical Trial and the SLE Open Label Study as defined in the UCB Agreement. We were also obligated to manufacture and supply epratuzumab, if needed and at UCB's request, for the initial commercial launch of epratuzumab for the treatment of SLE. The manufacturing requirements were limited by our production capacity at that time. UCB has sole responsibility for all clinical development, regulatory filings and related submissions, as well as all commercialization activities with respect to epratuzumab in all autoimmune indications. As of June 30, 2009 our only remaining obligation was to provide UCB with additional epratuzumab if requested. In

August 2009, UCB relieved us of our remaining obligation to supply UCB with any further supplies for SLE. Therefore, for the three-month period ended September 30, 2009 we recorded as revenue the remainder of the $31.1 million of deferred revenue from UCB.

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 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.

Research and development costs that are reimbursable under collaboration agreements are recognized as a reduction of research and development expenses. We record these reimbursements as a reduction of research and development expenses as our partner in the collaboration agreement has the financial risks and responsibility for conducting these research and development activities.

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 based on historical trends, estimated product returns and discounts. Since allowances are recorded based on management's estimates, actual amounts may be different in the future.

Auction Rate Securities

We hold a number of interest bearing auction rate securities, or ARS, that represent investments in pools of assets. These ARS investments are intended to provide liquidity via an auction process that resets the applicable interest rate at predetermined calendar intervals, allowing investors to either roll over their holdings or gain immediate liquidity by selling such interests at par. ARS have long-term scheduled maturities, but have interest rates that are typically reset at pre-determined intervals (every 28 days for the securities purchased by us), at which time the securities can typically be purchased or sold, creating a liquid market. In an active market for such investments, the rate reset for each instrument is an opportunity to accept the reset rate or sell the instrument at its face value in order to seek an alternative investment. In the past, the auction process has allowed investors to roll over their holdings or obtain immediate liquidity by selling the securities at par.

The ARS held are primarily AAA rated collateralized by student loans, guaranteed by the U.S. government under the Federal Family Education Loan Program and backed by insurance companies. To date we have collected all interest payable on all ARS when due and expect to continue to do so in the future.

As of September 30, 2009, we held six auction rate securities with a par value of $22.3 million, and these securities are classified as long-term investments on the condensed consolidated balance sheet. Until February 2008, the auction rate securities market was highly liquid. During the week of February 11, 2008, a substantial number of auctions "failed," meaning that there was not enough demand to sell the entire issue at auction. The uncertainties in the credit markets have affected our holdings in ARS investments as the auctions for these securities have failed to settle on their respective settlement dates. Consequently, the investments are not currently liquid and we will not be able to access these funds until a future auction of these investments is successful or a buyer is found outside of the auction process.

We reviewed ARS for impairment to determine whether the classification of the impairment is "temporary" or "other-than-temporary." A temporary impairment results in an unrealized loss being recorded in the other comprehensive income
(loss) component of stockholders' equity. This treatment is appropriate when a loss in an investment is determined to be temporary in nature and a company has the ability to hold the investment until a recovery in market value takes place. Such an unrealized loss does not affect net income (loss) for the applicable accounting period. The differentiating factors between temporary and other-than-temporary impairment are primarily the length of the time and the extent to which the market value has been less than cost, the financial condition and near-term prospects of the issuer and the intent and our ability to retain our investment in the issuer for a period of time sufficient to allow for any anticipated recovery in market value.

As a result of our assessment of a number of factors, including without limitation, market conditions and the credit quality of these securities, we determined that the estimated fair value no longer approximates par value, although we continue to earn interest on the current auction rate security investments at the maximum contractual rate. Accordingly, beginning with the three-month period ended March 31, 2008, we recorded an other than temporary impairment charge of $2.2 million to reduce the value of the ARS to their estimated fair value. Utilizing this discounted cash flow model we had determined that the change in the estimated fair value of our investments in ARS for the three-month periods ended September 30, 2009 and 2008 resulted in an unrealized gains of $0.2 million and $1.1 million, respectively. As of September 30, 2009, we estimated the fair value of these ARS at $17.7 million. We used a discounted cash flow model to determine the estimated fair value of our investment in ARS.

The significant assumptions used in preparing the discounted cash flow model as of September 30, 2009 include (i) estimates for the investment's contractual bond coupon rates (ranging from 1.25% - 1.75%), (ii) the market yield interest rates (estimated at the U.S. Treasury Seven-Year Bond Rate of 2.93% plus a premium factor of 2.0%) and (iii) the effective maturity period of approximately seven years (which is the period the auctions are expected to resume its normal function). If our estimates regarding the fair value of these securities are inaccurate, a future other-than-temporary impairment charge may be required. Additionally, these estimated fair values could change significantly based on future market conditions and, as such, we may be required to record additional losses for impairment if we determine there are further declines in fair value. During the three-month periods ended September 30, 2009 and 2008, we reported $144,000 and $86,000, respectively, of amortization of the market value discount of the ARS.

Estimated Fair Value of Financial Instruments

We have categorized our financial assets, based on the priority of the inputs to the valuation technique, into a three-level fair value hierarchy as set forth in Note 2, Summary of Significant Accounting Policies. We do not have any financial liabilities that are required to be measured at fair value on a recurring basis. If the inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

Foreign Currency Risks

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 and are included in the determination of comprehensive income. Transaction gains and losses are included in the determination of net income (loss).

Stock-Based Compensation

We have a stock incentive plan, the Immunomedics, Inc. 2006 Stock Incentive Plan, as amended, that includes a discretionary grant program, a stock issuance program and an automatic grant program. The plan was established to promote the interests of the Company, by providing eligible persons with the opportunity to acquire a proprietary interest in the Company as an incentive to remain with the organization. This plan is described more fully in Note 7 to our audited financial statements included in our Annual Report on Form 10-K for the year ended June 30, 2009 and Note 4 to our consolidated financial statements in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2009 included elsewhere herein.

The grant-date fair value of stock awards is based upon the underlying price of the stock on the date of grant. The grant-date fair value of stock option awards must be determined using an option pricing model. Option pricing models require the use of estimates and assumptions as to (a) the expected term of the option,
(b) the expected volatility of the price of the underlying stock and (c) the risk-free interest rate for the expected term of the option. The Company uses the Black-Scholes-Merton option pricing formula for determining the grant-date fair value of such awards.

The expected term of the option is based upon the contractual term and expected employee exercise and expected post-vesting employment termination behavior. The expected volatility of the price of the underlying stock is based upon the historical volatility of the Company's stock computed over a period of time equal to the expected term of the option. The risk free interest rate is based upon the implied yields currently available from the U.S. Treasury yield curve in effect at the time of the grant. Pre-vesting forfeiture rates are estimated based upon past voluntary termination behavior and past option forfeitures.

The following table sets forth the weighted-average assumptions used to calculate the fair value of options granted for the three-month periods ended September 30, 2009 and 2008:

                                       Three-Month Periods Ended September 30,
                                             2009                   2008
   Expected dividend yield                    0%                     0%
   Expected life of options (years)          5.78                   5.31
   Expected stock price volatility            92%                    93%
   Risk-free interest rate               3.06% - 3.12%          3.42% - 3.71%

Changes in any of these assumptions could impact, potentially materially, the amount of expense recorded in future periods related to stock-based awards.

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 September 30, 2009 Compared to 2008

Revenues

Revenues for the three-month period ended September 30, 2009 were $39,025,000, as compared to $4,902,000 for the same period in 2008, representing an increase of $34,123,000, or 696%. The increase for the three-month period ended September 30, 2009 is primarily the result of recording license fee revenue of $31,145,000 for the UCB Agreement and an increase of $3,069,000 in licensing fee revenue from the Nycomed Agreement for the three-month period ended September 30, 2009. There was no corresponding revenue for UCB in fiscal 2008. In August 2009, we received notice from UCB relieving us of our responsibilities for the manufacturing of epratuzumab, the only remaining obligation under the UCB agreement, thus allowing us to record the full amount of the remaining deferred license fee revenue this quarter. Product sales for the three-month period ended September 30, 2009 were $767,000, as compared to $1,062,000 for the same period in 2008, representing a decrease of $295,000, or 28%. This decrease resulted primarily from reduced sales volume of LeukoScan in Europe. Research and development revenues for the three-month period ended September 30, 2009 were $400,000 as compared to $196,000 for the previous year, due to the increased number and size of grant programs in place in the current fiscal period.

Costs and Expenses

Total costs and expenses for the three-month period ended September 30, 2009 were $7,257,000, as compared to $7,294,000 for the same period in 2008, representing a decrease of $37,000. Research and development expenses for the three-month period ended September 30, 2009 were $5,533,000 as compared to $5,608,000 for the same period in 2008, a decrease of $74,000 or 1%. The reduction in research and development expenses resulted primarily from $1.4 million of increased expense reimbursements from Nycomed, offset by $706,000 of higher levels of materials, supplies and testing for Nycomed related production, $329,000 of higher spending for clinical trials as well as higher headcount and related salaries and employee benefits. Cost of goods sold for the three-month period ended September 30, 2009 was $73,000 as compared to $120,000 for the same period in 2008. Gross profit margins were 90% and 89%, respectively in the first quarter of fiscal 2010 and 2009. Sales and marketing expenses for the three-month period ended September 30, 2009 of $210,000 was comparable to the $196,000 amount for the same period in 2008, an increase of $14,000 or 7%. General and administrative expenses were $1,440,000 for the three-month period ended September 30, 2009 representing an increase of $70,000 or 5% compared to the three-month period ended September 30, 2008. This increase is primarily attributable to the accrual of $542,000 of additional incentive compensation due to our Chairman in accordance with his employment agreement, resulting from the expectation of the Company's profitability for the 2010 fiscal year. Such expectation is primarily the result of increased licensing fee revenue recognized under the UCB and Nycomed agreements. There can be no assurance that the Company will be profitable for the 2010 fiscal year. The increase in fiscal 2010 expenses was partially offset by $300,000 of additional incentive compensation paid in the previous year to our Chairman as a result of the consummation of the Nycomed Agreement (in accordance with his employment agreement); as well as lower payroll related expenses and reduced legal expenses in the 2010 fiscal year.

Interest and Other Income

Interest and other income for the three-month period ended September 30, 2009 was $236,000 as compared to $381,000 for the same period in 2008, a reduction of $145,000. This decline was primarily the result of lower levels of cash available for investments during the quarter, (the $40.0 million of proceeds from the Nycomed Agreement was received in mid-August 2008), as well as lower rates of return on investments. Included in the interest and other income for the three-month periods ended September 30, 2009 and 2008 was $144,000 and $86,000, respectively, for the amortization of the discount for the auction rate securities.

Foreign Currency Transaction Gain

Foreign currency transactions amounted to a gain of $49,000 for the three-month period ended September 30, 2009 as compared to a loss of $17,000 for the same period in 2008, primarily as a result of currency fluctuations between the U.S. . . .