Stock Update (NASDAQ:IPCI): IntelliPharmaCeutics Intl Inc (USA) Announces Second Quarter 2015 Results


IntelliPharmaCeutics Intl Inc (USA) (NASDAQ:IPCI), a pharmaceutical company specializing in the research, development and manufacture of novel and generic controlled-release and targeted-release oral solid dosage drugs, today reported the results of operations for the three and six months ended May 31, 2015. All dollar amounts referenced herein are in United States dollars unless otherwise noted.

During the three months ended May 31, 2015, the Company continued with its conservative approach to cash management while still focusing principally on the development of its specialty drug product candidates RexistaTM Oxycodone XR and RegabatinTM XR. The Company’s near term funding requirements also benefited from the recent United States Food and Drug Administration (“FDA”) notification received by the Company that Phase III studies for RexistaTM Oxycodone XR will not be required if bioequivalence to an existing branded drug Oxycontin® is demonstrated. Nonetheless, in order to continue with its specialty drug products development plan, the Company is continuing to seek sources of additional capital.

Revenue related to the Company’s license and commercialization agreement with Par Pharmaceutical, Inc. (“Par”) in the three months ended May 31, 2015 was $1.2 million versus $1.4 million in the three months ended May 31, 2014. As the first-filer for generic Focalin XR® (dexmethylphenidate hydrochloride extended-release) capsules in the 15 mg strength, we had 180 days (up to May 19, 2014) of exclusivity of sales for that strength from the date of launch on November 19, 2013 in the United States by our partner, Par. The slightly higher revenue in the second quarter of 2014 was in large part a result of the commercial sales occurring in the early stages of marketing the product in those strengths during an exclusivity period. Subsequent to May 19, 2014, we no longer retained generic exclusivity of the 15 mg strength. Consequently, we faced four generic competitors, and to a lesser extent, a softening of pricing conditions and market share, consistent with industry post-exclusivity experience. In the three months ended May 31, 2014, we also recorded milestone revenue of $108,320 under the Par agreement, which is tied to the achievement of our product being either the only generic in the market or having only one generic competitor. Revenue under the Par Agreement represents the commercial sales of the generic product in those strengths and may not be representative of future sales.

Research and development (“R&D”) expenditures in the three months ended May 31, 2015 decreased to $1.6 million compared to $3.4 million in the three months ended May 31, 2014, primarily due to a decrease in stock-based compensation for R&D employees and reduced spending for R&D activities associated with our 505(b)(2) specialty drug product candidates (RexistaTM Oxycodone XR and RegabatinTM XR) and the U.S. dollar strengthening by 12% versus the Canadian dollar (local salaries are paid in Canadian funds) relative to the prior period. After adjusting for the stock-based compensation expenses discussed above, expenditures for R&D for the three months ended May 31, 2015, were lower by $0.6 million compared to the prior period. This is primarily due to the fact that during the three months ended May 31, 2014 we incurred increased expenses on furthering the development of several generic and New Drug Application (“NDA”) 505(b)(2) product candidates, and paid bonuses to certain R&D management employees, compared to the three months ended May 31, 2015 when no bonuses were paid.

Selling, general and administrative expenses for the three months ended May 31, 2015 decreased to $1.0 million versus $1.1 million in the three months ended May 31, 2014. Expenditures for selling, general and administrative expenses were lower by $0.1 million during the 2015 period, primarily due to strengthening of the US dollar by 12% versus the Canadian dollar in the first quarter of 2015, relative to the prior period. In particular, the stronger US dollar had a positive impact on wages and salaries (paid in Canadian dollars), partially offset by higher administrative and marketing costs.

The Company recorded net loss for the three months ended May 31, 2015 of $1.5 million or $0.06 per diluted common share, compared with a net loss of $3.1 million or $0.14 per common share for the three months ended May 31, 2014. The net loss for the three months ended May 31, 2015, is $1.6 million lower than the comparable prior period primarily due to reduced stock-based compensation and bonus expense, and tighter overall cost control. During the three months ended May 31, 2015, the net loss is attributed to the ongoing R&D and selling, general and administrative expenses, partially offset by licensing revenues from commercial sales of generic Focalin XR® (dexmethylphenidate hydrochloride extended-release) capsules. During the three months ended May 31, 2014, the net loss is attributed to increased R&D and selling, general and administrative expense, including an increase in stock-based compensation expense, payment of bonuses to executive officers, salary increases to certain non-management employees, partially offset by licensing revenue and milestone revenue.

The Company had cash of $3.0 million as at May 31, 2015 compared to $4.2 million as at February 28, 2015. The decrease in cash during the three months ended May 31, 2015 is mainly a result of lower payments received from the commercial sales of our generic Focalin XR® (dexmethylphenidate hydrochloride extended-release) capsules for the 15 and 30 mg strengths, an increase in cash flows provided from financing activities which are mainly from common share sales under the Company’s at-the-market offering program, partially offset by an increase in purchases of production, laboratory and computer equipment.

For the three months ended May 31, 2015, net cash flows used in operating activities decreased to $1.2 million as compared to net cash flows provided from operating activities for the three months ended May 31, 2014 of $0.9 million. The May 31, 2015 decrease was primarily due to lower cash receipts relating to commercial sales of generic Focalin XR® (dexmethylphenidate hydrochloride extended-release) capsules. The increase in cash during the three months ended May 31, 2014 is mainly a result of the cash flows provided from operating activities which are from an increase in the licensing revenue and milestone revenue, an increase in cash flows provided from financing activities which are mainly from common share sales under the Company’s at-the-market offering program, partially offset by an increase in purchases of production, laboratory and computer equipment.

For the three months ended May 31, 2015, net cash flows provided from financing activities of $0.1 million related principally to the at-the-market issuances of 82,700 of our common shares sold on NASDAQ for gross proceeds of $0.2 million and net proceeds of $0.2 million, and to the exercise of options, partially offset by capital lease and financing cost payments. For the three months ended May 31, 2014, net cash flows provided from financing activities of $1.0 million related principally to at-the-market issuances of 377,400 of our common shares sold on NASDAQ for gross proceeds of $1.6 million and net proceeds to us of $1.6 million.

Corporate Highlights

  • In March 2015, the Company reported that the FDA had accepted a Pre-Investigational New Drug (“Pre-IND”) meeting request for its once-a-day Regabatin™ XR non-generic controlled release version of pregabalin under the NDA 505(b)(2) regulatory pathway, with a view to possible commercialization in the United States at some time following the December 30, 2018 expiry of the patent covering the pregabalin molecule. Regabatin™ XR is based on the Company’s controlled release drug delivery technology platform which utilizes the symptomatology and chronobiology of fibromyalgia in a formulation intended to provide a higher exposure of pregabalin during the first 12 hours of dosing. Based on positive feedback and guidance from the FDA, the Company plans to submit an Investigational New Drug Application (“IND”) in the third quarter of 2015, although no assurance to this effect can be given.
  • In May 2015, the Company announced that the FDA had provided the Company with notification regarding its IND submission for Rexista™ Oxycodone XR (Abuse Deterrent oxycodone hydrochloride) extended release tablets indicating that the Company will not be required to conduct Phase III studies if bioequivalence to Oxycontin® is demonstrated. The Company believes, in light of previously announced results of the three definitive Phase I pharmacokinetic trials, that it will not be required to conduct Phase III studies, although no assurance to that effect can be given. The Company believes the FDA notification is significant as it provides a basis for an accelerated development plan for its Rexista™ Oxycodone XR product candidate, without the need for more costly and time consuming Phase III studies. The Company intends to file an NDA for Rexista™ Oxycodone XR (Abuse Deterrent oxycodone hydrochloride) extended release tablets with the FDA within the next 6 to 12 months, although no assurance to this effect can be given.
  • In May 2015, the Company announced that the FDA had reviewed the Company’s request for Fast Track designation for its abuse deterrent Rexista™ Oxycodone XR (Oxycodone HCl) extended-release tablets development program incorporating its Paradoxical OverDose Resistance Activating System (“PODRAS™”) and had concluded that it meets the criteria for Fast Track designation. Fast Track is a designation assigned by the FDA in response to an applicant’s request which meets FDA criteria. The designation mandates the FDA to facilitate the development and expedite the review of drugs intended to treat serious or life threatening conditions and that demonstrate the potential to address unmet medical needs. This could potentially result in accelerated approval for Rexista™ Oxycodone XR thereby making it available to patients earlier than would be traditionally possible.
  • In June 2015, the Company announced that the FDA had indicated that the Company’s tentatively-approved strengths of its generic Focalin XR® (dexmethylphenidate hydrochloride extended-release) capsules would have to meet newly-imposed conditions for bioequivalence prior to receiving final approval. The strengths affected were 5 mg, 10 mg, 20 mg and 40 mg. The already-approved 15 mg and 30 mg strengths now in the market were not affected. In July 2015, the FDA indicated to the Company that it had rescinded its previous requirement that the Company meet the newly-imposed conditions for bioequivalence prior to receiving final approval for the Company’s tentatively-approved strengths of generic Focalin XR®. The Company is not aware of any further action required of it in respect of its ANDA for its tentatively-approved strengths. The Company is therefore hopeful that the FDA will shortly grant final approval for the 5 mg strength which is no longer subject to the six months of market exclusivity accorded to the first-filer of an ANDA.

There can be no assurance that the Fast Track designation for RexistaTM Oxycodone XR will translate to a faster development and review process with the FDA, that our tentatively-approved strengths of generic Focalin XR® will be granted final FDA approval or sold commercially, that we will be successful in submitting any additional ANDAs, Abbreviated New Drug Submissions (“ANDSs”) or NDAs with the FDA or similar applications with Health Canada, that the FDA or Health Canada will approve any of our current or any future product candidates for sale in the U.S. market and Canadian market, or that they will ever be successfully commercialized and produce significant revenue for us. (Original Source)

Shares of Intellipharmaceutics closed last Friday at $3.48. IPCI has a 1-year high of $3.92 and a 1-year low of $1.94. The stock’s 50-day moving average is $3.21 and its 200-day moving average is $2.73.

On the ratings front, Intellipharmaceutics has been the subject of a number of recent research reports. In a report issued on July 9, Maxim Group analyst Jason Kolbert maintained a Buy rating on IPCI, with a price target of $8, which represents a potential upside of 129.9% from where the stock is currently trading. Separately, on May 21, Brean Murray Carret’s Jonathan Aschoff reiterated a Buy rating on the stock and has a price target of $8.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Jason Kolbert and Jonathan Aschoff have a total average return of -1.3% and 12.8% respectively. Kolbert has a success rate of 38.1% and is ranked #3229 out of 3694 analysts, while Aschoff has a success rate of 56.7% and is ranked #139.

IntelliPharmaCeutics International Inc is a pharmaceutical company specializing in the research, development and manufacture of novel and generic controlled-release and targeted-release oral solid dosage drugs.