Stock Update (NASDAQ:IPCI): IntelliPharmaCeutics Announces First Quarter 2016 Results


Intellipharmaceutics International Inc. (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 months ended February 29, 2016.  All dollar amounts referenced herein are in United States dollars unless otherwise noted.

First Quarter Key Highlights

  • Announced that pivotal bioequivalence trials for Rexista™ Oxycodone XR demonstrated bioequivalency to Oxycontin®.
  • Plan to file New Drug Application (“NDA”) for Rexista™ Oxycodone XR within three months on basis that no Phase III studies required.
  • Progress on Rexista™ Oxycodone XR continues, NDA user fee waiver request filed.
  • Secured final United States Food and Drug Administration (“FDA”) approval to market generic Keppra XR®.  Commercial options under review.

Corporate Developments

  • In February 2016, the Company announced that the FDA granted final approval of its Abbreviated New Drug Application (“ANDA”) for levetiracetam extended release tablets for the 500 mg and 750 mg strengths. The Company’s newly approved product is the generic equivalent of the branded product Keppra XR® sold in the United States by UCB, Inc.  Keppra XR®, and the drug active levetiracetam, are indicated for use in the treatment of partial onset seizures associated with epilepsy. According to Symphony Health Solutions, sales in the United States for the 12 months ended February 2016 of the 500 mg and 750 mg strengths of Keppra XR® and all generic equivalents were approximately $156 million (in TRx MBS Dollars, as defined in our latest Form 20-F).  The Company is actively exploring the best approach to maximize its commercial returns from the new approval.
  • In January 2016, the Company announced that pivotal bioequivalence trials of the Company’s Rexista™ Oxycodone XR (abuse deterrent oxycodone hydrochloride) extended release tablets, dosed under fasted and fed conditions, had demonstrated bioequivalence to Oxycontin® (oxycodone hydrochloride) extended release tablets as manufactured and sold in the United States by Purdue Pharma LP. The study design was based on FDA recommendations and compared the lowest and highest strengths of exhibit batches of the Company’s Rexista™ Oxycodone XR to the same strengths of Oxycontin®. The results show that the ratios of the pharmacokinetic metrics, Cmax, AUC0-t  and AUC0-f  for Rexista™ vs. Oxycontin®, are within the interval of 80% – 125% required by the FDA with a confidence level exceeding 90%. Having now demonstrated such bioequivalence for its Rexista™ Oxycodone XR product we expect to market assuming FDA approval, the Company intends to complete the regulatory filing requirements and file an NDA for Rexista™ Oxycodone XR with the FDA within the next 3 months in accordance with the NDA 505(b)(2) regulatory pathway.  The Company also applied for an NDA user fee waiver from the FDA.  If granted, this waiver could reduce the full user fee amount of $1,187,100.  The Company expects a response from the FDA prior to filing the NDA for Rexista™ Oxycodone XR.

There can be no assurances that we will not be required to conduct further studies for Rexista™ Oxycodone XR, that we will be successful in filing an NDA for Rexista™ Oxycodone XR in three months’ time, that the FDA will grant the full user fee waiver for Rexista™ Oxycodone XR, that our approved generic of Keppra XR® will be successfully commercialized, 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 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.

2016 First Quarter Financial Results

Revenue related to the Company’s license and commercialization agreement with Par Pharmaceutical, Inc. (“Par”) was $0.6 million for the three months ended February 29, 2016 versus $1.1 million for the three months ended February 28, 2015. These revenues are principally from sales of its generic Focalin XR® (dexmethylphenidate hydrochloride extended-release capsules) for the 15 and 30 mg strengths. The decrease in revenues is primarily due to increased competition and a softening of pricing conditions on our generic Focalin XR® capsules.  A fifth generic competitor entered the market in the second half of 2015, resulting in increased price competition and lower market share.  Based on the recent trends, we believe our market share has stabilized at approximately 33% for the combined strengths of our generic Focalin XR® capsules.

The Company recorded net loss for the three months ended February 29, 2016 of $2.1 million or $0.09 per diluted common share, compared with a net loss of $0.9 million or $0.04 per common share for the three months ended February 28, 2015. For the three months ended February 29, 2016, the net loss was attributed to lower licensing revenues and higher stock option expense as a result of certain performance based stock options that vested with the FDA approval of generic Keppra XR®. The lower revenues, as discussed above, resulted in margin compression and lower market share with the fifth generic competitor entering in the second half of 2015.    Stock option expense for the three months ended February 29, 2016 and February 28, 2015 was $0.7 million and $Nil (rounded), respectively.  Stock option expense is a non-cash item.

Research and development (“R&D”) expenditures in the three months ended February 29, 2016 were $1.8 million in comparison to $1.0 million in the three months ended February 28, 2015. The increase over the prior period is due to $0.7 million in expenses related to performance-based stock options which vested on FDA approval of our generic Keppra XR® in February 2016, compared to $Nil (rounded) in the comparable prior period.  We also incurred higher expenses on furthering the development of our Rexista™ Oxycodone XR NDA product candidate.

Selling, general and administrative expenses were $0.8 million for the three months ended February 29, 2016 in comparison to $0.9 million for the three months ended February 28, 2015. The decrease is primarily due to lower expenses related to wages and administrative costs and lower professional fees, partially offset by an increase in marketing costs.

The Company had cash of $0.4 million as at February 29, 2016 compared to $1.8 million as at November 30, 2015. The decrease in cash during the three months ended February 29, 2016 was mainly a result of lower cash receipts relating to commercial sales of our generic Focalin XR® capsules, an increase in cash flow used in operating activities related to Rexista Oxycodone XR® development work, partially offset by a decrease in purchases of production, laboratory and computer equipment and an increase in cash flows provided from financing activities which were mainly from common share sales under the Company’s at-the-market offering program. For the three months ended February 29, 2016, net cash flows provided from financing activities of $0.5 million related principally to at-the-market issuances of 193,043 of our common shares sold on NASDAQ and the exercise of 58,139 warrants, partially offset by capital lease payments. (Original Source)

Shares of Intellipharmaceutics International closed yesterday at $2.13, down $0.05 or -2.29%. IPCI has a 1-year high of $3.92 and a 1-year low of $1.73. The stock’s 50-day moving average is $2.17 and its 200-day moving average is $2.08.

On the ratings front, Maxim Group analyst Jason Kolbert reiterated a Buy rating on IPCI, with a price target of $6, in a report issued on January 19. The current price target implies an upside of 181.7% from current levels. According to TipRanks.com, Kolbert has a yearly average return of -12.1%, a 33.1% success rate, and is ranked #3792 out of 3798 analysts.

Intellipharmaceutics International, Inc. is a pharmaceutical company, which specializes in the research, development and manufacture of novel and generic controlled-release and targeted-release oral solid dosage drugs. Its patented Hypermatrix technology is a multidimensional controlled-release drug delivery platform that can be applied to the development of existing and new pharmaceuticals in the areas of neurology, cardiovascular, gastrointestinal tract, diabetes and pain. The company was founded on October 22, 2009 and is headquartered in Toronto, Canada.