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, 2016. All dollar amounts referenced herein are in United States dollars unless otherwise noted.
- Announced that the FDA granted the Company a waiver of the NDA user fee related to RexistaTM XR.
- Made continued progress on the Company’s RexistaTM XR development program, reporting positive pharmacokinetic results showing no “food effect”.
- Consummated an underwritten public offering, netting proceeds to the Company of approximately $5.3 million.
- In July 2016, the United States Food and Drug Administration (“FDA”) completed its review of our previously requested waiver of the new drug application (“NDA”) user fee related to our RexistaTM XR (abuse deterrent oxycodone hydrochloride extended release tablets) NDA product candidate. The FDA, under the small business waiver provision section 736(d)(1)(D) of the Federal Food, Drug, and Cosmetics Act, granted the Company a waiver of the $1,187,100 application fee for RexistaTM XR.
- In July 2016, Intellipharmaceutics announced the results of a food effect study conducted on its behalf for RexistaTM XR. The study showed that RexistaTM XR can be administered with or without a meal (i.e., food does not affect the rate and extent of absorption). The Company believes that RexistaTM XR is well differentiated from currently marketed oral oxycodone extended release products. The Company plans to file the NDA for RexistaTM XR in August 2016.
- In June 2016, the Company announced the closing of its underwritten public offering of 3,229,814 units of common shares and warrants, at a price of $1.61 per unit. In connection with the offering, the Company issued an aggregate of 3,229,814 common shares and warrants to purchase an additional 1,614,907 common shares. The underwriter also purchased additional warrants at a purchase price of $0.001 per warrant to acquire 240,390 common shares pursuant to the over-allotment option exercised in part by the underwriter. The warrants are exercisable immediately, have a term of five years and an exercise price of $1.93 per common share. After underwriting discounts, commissions and estimated offering expenses, the Company received net proceeds of approximately $4.6 million. The Company subsequently consummated closings of the sales of an aggregate of 459,456 additional common shares at the public offering price of $1.61 per share. The Company received net proceeds of approximately $0.7 million from the subsequent partial exercises of the over-allotment option, after deducting the underwriting discount. The closings of these partial exercises brought the total net proceeds from the offering to approximately $5.3 million, after deducting the underwriter’s discount and estimated offering expenses.
There can be no assurance that we will not be required to conduct further studies for Rexista™ XR, that we will continue to satisfy the criteria for the waiver of the application fee, that we will file an NDA for Rexista™ XR in August 2016, that the FDA will ultimately approve the NDA for the sale of Rexista™ XR in the U.S. market, that it will ever be successfully commercialized, that we will be successful in submitting any additional Abbreviated New Drug Applications (“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 Second Quarter Financial Results
Revenue related to the Company’s license and commercialization agreement with Par Pharmaceutical, Inc. in the three months ended May 31, 2016 was $0.6 million versus $1.3 million for the three months ended May 31, 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 for 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. Our market share for the combined strengths has stabilized over the last several months at approximately 33%.
The Company recorded net loss for the three months ended May 31, 2016 of $2.0 million or $0.08 per common share, compared with a net loss of $1.5 million or $0.06 per common share for the three months ended May 31, 2015. For the three months ended May 31, 2016, the net loss was attributed to lower licensing revenues and ongoing Research and development (“R&D”) and selling, general and administrative expenses. The lower revenues resulted in margin compression and lower market share with a fifth generic competitor entering the market in the second half of 2015.
R&D expenditures in the three months ended May 31, 2016 were $1.5 million, which were lower in comparison to the three month period ended May 31, 2015 of $1.6 million. The reduced spending is due to lower third party R&D expenditures (specifically for clinical studies), as compared to the three months ended May 31, 2015.
Selling, general and administrative expenses were $0.9 million for the three months ended May 31, 2016 in comparison to $1.0 million for the three months ended May 31, 2015. The decrease is primarily due to the lower expenses related to a decrease in professional fees and marketing cost, partially offset by an increase in wages and occupancy cost.
The Company had cash of $0.2 million as at May 31, 2016 compared to $0.4 million as at February 29, 2016. The decrease in cash during the three months ended May 31, 2016 was mainly a result of lower cash receipts relating to commercial sales of our generic Focalin XR® capsules for the 15 mg and 30 mg strengths, partially offset by cash flows provided from financing activities which were mainly from common share sales under the Company’s at-the-market offering program. As of July 12, 2016, we had a cash balance of $3.4 million.
For the three months ended May 31, 2016, net cash flows provided from financing activities of $1.1 million related principally to at-the-market issuances of 562,561 of our common shares sold on NASDAQ, partially offset by capital lease payments. (Original Source)
Shares of Intellipharmaceutics International closed yesterday at $1.62, up $0.01 or 0.63%. IPCI has a 1-year high of $3.87 and a 1-year low of $1.41. The stock’s 50-day moving average is $1.57 and its 200-day moving average is $2.00.
On the ratings front, Brean Murray Carret analyst Jonathan Aschoff reiterated a Buy rating on IPCI, with a price target of $8, in a report issued on July 6. The current price target represents a potential upside of 393.8% from where the stock is currently trading. According to TipRanks.com, Aschoff has a yearly average return of -11.4%, a 35.4% success rate, and is ranked #3949 out of 4055 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.