Replies to post #23391 on Intellipharmaceutics International Inc. (IPCI)

[doogdilinger]

I've always said that the joe retailers who will make big bank here are the ones willing to stick around until IPCI's generating BILLIONS in revenue.

PCYC is still the best comparison to IPCI at this stage...PCYC had just over +50M fully diluted shares and floundered around 5 bucks per share in their R&D years...when abruptly out of nowhere they finally got noticed and rewarded by having their floats accumulated by the big money institutions which ran their stock price from $5 per share all the way to $275 per share before being bought out!

IPCI only has 39M fully diluted shares and will soon be CFP and bursting onto the scene with a lucrative Rexista partnership and partner for PODRAS development.

Those who continuously claim that IPCI is supposedly such a disappointment before the breakthrough years even get started simply aren't focused on the true potential here and aren't grasping the concept of what occurs when the funds/institutions accumulate 70% of the available floats of burgeoning bio's like IPCI:)

Here's PCYC's performance for those who want to see what occurs when funds/institutions accumulate a company's tradable float over the course of a handful of years>>>

http://www.stockwatch.com/Chart/Advanced.aspx?time=10&symbol=PCYC®ion=U

[Amigo Mike]

Fabius,

I don't agree with your ascertion that others value IPCI as being considered in the realm of a "value company". It is a biotech firm period. High risk, potential high reward. Definitely not a "value" company.

IMO, You have it right with regard to how these companies are valued. And that is where I am coming from with a number of my comments. Other comments here are just tossed out on a whim with no substantive reasoning or facts to back them up. What you describe is how "the street" goes about it.

But for all those who can have access to investment banking modeling for biotech (and I am one of those) it is well known that biotechs are modeled based on:

drugs in pipeline
-- expected peak sales for that drug in 3 to 5 yrs
-- probability analysis about the drug receiving final approval (based on level of trials, FDA actions, etc)
-- discounting the peak sales x probability of being approved, with the discount rate being the higher the more risky is the process
-- scenario analysis to determine the most likely scenario
-- sum of parts (more than one drug) when appropriate.

So you see the disconnect between many of those who write here and the approach usually taken by practice.

This is similar to model I have used for at least 2 decades. There are other factors in the model. However I think you are a little off on your ascertion of the disconnect.

1. Generic or new ??? Generic is valued at a much lower ratios. What new drugs does IPCI have ? Rexista while following the NDA pathway is another form of oxycodone right ? An established market with other candidates already in the marketplace. I also add whether there are other options in the marketplace i.e. is it first to market for the target disease ?
1a. New technology applied to existing drug ? A component for consideration, however again, there are ADF versions available already. How much of a differentiator is blue dye and no food effect ??? Somewhat of a wildcard at this point.
2. Peak sales - generic drugs typically do not enjoy any exclusivity beyond the 180 days and are characterized by constant margin pressures from competition vs years of exclusivity and pricing power for a new drug.
3. Pipeline .... what drugs, generic or otherwise, are active in current IPCI "pipeline" ? Most everything as it relates to clinical activity has been silent for quite some time.
4. Level of trials. Absolutely agree. As each trial step is successfully completed, the valuation ratio moves higher. What trials is IPCI currently working on ?
4a. How many human trials have occurred on PODRAS ?
5. And with IPCI, it is NOT a fully integrated biotech/pharma, therefore all of the inputs above need to be CUT by whatever % needed to account for partnering with another company to bring the drugs to market. IPCI cannot get full valuation in such a model because they are NOT DELIVERING TO THE MARKET ON THEIR OWN.
6. I have other pieces for licensing, royalties, etc that can also influence valuation.

So this is where I come from.
I am VERY CURIOUS as to the numbers you are plugging into your model.

Some want a comparison to PCYC which is laughable. PCYC developing new drugs for different forms of cancer and life threatening diseases. A broad pipeline in various stages of development. Partnered with 4 or 5 of the top pharmas in the world on development of their candidates and combination therapies. Compare to IPCI eh ? WRONG. IPCI is nowhere near where PCYC was when purchased.
http://www.pharmacyclics.com/home/research-development/pipeline
http://www.pharmacyclics.com/home/partnerships

Does not the MNK deal with IPCI tell you how the markets and big pharma value generics ??? The established market for the 3 drug candidates MNK partnered for is $2.5 billion. IPCI got $3 million upfront. $3 million. IPCI's own presentation puts the Oxycodone XR market at $2.1 billion. There are a couple XR oxycodone based versions available. Rexista #4 to market if approved ?? Remember, outside of the technology for ADF, Rexista is oxycodone. Purdue likely to fight tooth and nail to keep its market share (unless they are the partner). So how much more upfront should a partner pony up and potentially have to do battle with Purdue ??

Why has IPCI not announced a Rexista partnership yet ? Is it maybe because they aren't getting the deal they think they should get ? Why keep the markets and your investors in suspense ? To what or whose benefit is that ?

My ascertion on the upfront payment to IPCI for Rexista ..... first ..... IT IS ONLY THE UPFRONT PAYMENT. There can and should be MANY OTHER COMPONENTS TO THE DEAL. Speculation is deal to include PODRAS. Well the partner is gonna have to chip in for clinical trials of PODRAS right ? We all agree on that right ?Yes that could be $20-$30 million. Right there you are at $30-$40 million. IMO the added development for PODRAS significantly reduces the upfront payment. Then you add milestones for clinical development, approvals, etc .... and the deal value continues to rise. UPFRONT PAYMENT WOULD BE ENTIRELY DIFFERENT STORY IF PODRAS WAS ALREADY PROVEN. Then I'd be fully on board with a "monsta" upfront payment.

Lets not forget there is no assurance IPCI gets the abuse deterrent labeling they seek. Let's not forget there is no assurance original Rexista hits the market in September. You have other posters here battling over when Rexista can actually come to market assuming the FDA approves. Why isn't mgmt. clearing up these questions ? Have they submitted Paragraph IV letter to Purdue ? What's the delay ?

As I have stated before, I am long. Believe IPCI does have significant potential. And while some here aren't willing to consider anything but their own pie in the sky projections, there are MANY potential outcomes despite what logic would strongly suggest. One has to be realistic and look at all the possibilities. It takes time. But folks seem to think the stock should run to the moon now. It simply takes time to build. And conclusions are being drawn without consideration for many many other things. It simply isn't that cut and dried.

Amigo Mike

[beachguy3363]

They're not legitimately valuing anything dude... they're flippers and that's all they are! Can't believe you fell for that crap. I don't pay any attention to thing they say. When IPCI files a quarterly where they show a profit and stock can sustain $5+ pps it will finally start to make a serious run because institutions will get involved. Now anybodies guess is as good as mine on when that possibly might happen!