Intellipharmaceutics Announces Second Quarter 2017 Results Date : 07/11/2017 @ 5:15PM Source : GlobeNewswire Inc. Stock : Intellipharmaceutics International Inc. (MM) (IPCI) Quote : 2.8 0.3601 (14.76%) @ 4:47PM
Intellipharmaceutics Announces Second Quarter 2017 Results Print Alert Intellipharmaceutics International Inc. (MM) (NASDAQ:IPCI) Intraday Stock Chart Today : Tuesday 11 July 2017
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Intellipharmaceutics International Inc. (NASDAQ:IPCI) (TSX:IPCI) (“Intellipharmaceutics” or the “Company”), 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, 2017. All dollar amounts referenced herein are in United States dollars unless otherwise noted. Second Quarter Key Highlights
Revenues more than tripled to $2.0 million from $0.6 million (launch of new generic Focalin XR® strengths) Secured final FDA approval for all strengths of generic Seroquel XR® Successfully manufactured and shipped all strengths of generic Seroquel XR® to Mallinckrodt Mallinckrodt launched all strengths of generic Seroquel XR® Progress on Rexista™ NDA continues with joint meeting of the FDA Advisory Committees scheduled for July 26, 2017 The CEO of Intellipharmaceutics, Dr. Isa Odidi, said, “We are pleased with the recent progress made on both the generic and NDA initiatives, having demonstrated our manufacturing capability in respect of generic Seroquel XR®, and the FDA scheduling of the Advisory Committees meeting to review our Rexista™ NDA candidate. These are welcome developments on the heels of significant revenue improvement in the second quarter, which we expect to continue into the second half.”
Corporate Developments
In June 2017, we announced that a joint meeting of the Anesthetic and Analgesic Drug Products Advisory Committee and Drug Safety and Risk Management Advisory Committee of the United States Food and Drug Administration (“FDA”) has been scheduled for July 26, 2017 to review the Company's New Drug Application (“NDA”) for Rexista™ abuse-deterrent oxycodone hydrochloride extended release tablets. The submission also includes abuse-deterrent studies conducted to support abuse-deterrent label claims, having reference to the FDA's "Abuse-Deterrent Opioids — Evaluation and Labeling" guidance published in April 2015. The abuse-deterrent properties incorporated into Rexista™ are designed to make the product unlikable and discourage or make it more difficult to manipulate for the purpose of abuse or misuse, and the Company is preparing to share its data with the Advisory Committees as a key step towards securing FDA approval of Rexista™.
In June 2017, we announced that Mallinckrodt LLC (“Mallinckrodt”), in its capacity as the Company’s marketing and distribution partner, launched all strengths of our generic Seroquel XR® (quetiapine fumarate extended-release tablets) in the U.S. This launch follows the recent final approval from the FDA for the Company's Abbreviated New Drug Application (“ANDA”) for quetiapine fumarate extended-release tablets in the 50, 150, 200, 300 and 400 mg strengths. The approved product is a generic equivalent of the corresponding strengths of the branded product Seroquel XR® sold in the U.S. by Astra Zeneca Pharmaceuticals LP. Under its license and commercial supply agreement with Mallinckrodt, the Company granted Mallinckrodt a license to market, sell and distribute in the U.S. our generic Seroquel XR® and the Company manufactures and supplies the licensed product for Mallinckrodt. There can be no assurance that our generic Seroquel XR® product will be successfully commercialized or produce significant revenues for us. Also, there can be no assurance that we will not be required to conduct further studies for Rexista™, that the FDA will ultimately approve the NDA for the sale of Rexista™ in the U.S. market, or that it will ever be successfully commercialized, that we will be successful in submitting any additional ANDAs or NDAs with the FDA or Abbreviated New Drug Submissions (“ANDSs”) 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.
2017 Second Quarter Financial Results
The Company recorded revenues of $2.0 million for the three months ended May 31, 2017 versus $0.6 million for the three months ended May 31, 2016. For the three months ended May 31, 2017, we recognized licensing revenue of $2.0 million primarily from commercial sales of 15, 25, 30 and 35 mg strengths of generic Focalin XR® capsules under our license and commercialization agreement with Par Pharmaceuticals Inc. (“Par”). The increase in revenues is due to Par’s January 2017 launch of the 25 and 35 mg strengths of generic Focalin XR® capsules in the U.S. and also reflects revenue from the Company’s first shipment of generic Seroquel XR® to Mallinckrodt (subsequently launched by Mallinckrodt in June 2017). The Company’s revenues on the 25 and 35 mg strengths of generic Focalin XR® are expected to decline commencing in July 2017 when their 6 month exclusivity expires. The Company’s revenues on the 10 and 20 mg strengths of generic Focalin XR® in the second quarter of 2017 are negligible due to their launch date being late May 2017. Revenues under the Par and Mallinckrodt license agreements represents the commercial sales of the generic products in those strengths and may not be representative of future sales.
The Company recorded net loss for the three months ended May 31, 2017 of $1.8 million, or $0.06 per common share, compared with a net loss of $2.0 million, or $0.08 per common share, for the three months ended May 31, 2016. In the three months ended May 31, 2017, the lower net loss is primarily attributed to higher licensing revenues from commercial sales of generic Focalin XR® in the second quarter of 2017, partially offset by an increase in performance-based options expense and third-party research and development (“R&D”) expenditures. Revenue in the three months ended May 31, 2017 was $2.0 million versus $0.6 million in the prior period, with the increase primarily due to Par’s launch of the 25 and 35 mg strengths of its generic Focalin XR® capsules.
Expenditures for R&D for the three months ended May 31, 2017 were higher by $1.2 million compared to the three months ended May 31, 2016. The increase is primarily due to higher stock option compensation expense as a result of certain performance-based stock options vesting upon FDA approval of quetiapine fumarate extended release tablets and due to higher third party consulting fees associated with our preparation for the FDA Advisory Committee meeting in relation to our Rexista™ NDA filing. After adjusting for the stock-based compensation expenses, expenditures for R&D for the three months ended May 31, 2017 were higher by $0.4 million compared to the three months ended May 31, 2016. This is primarily due to an increase in third party R&D expenditures.
Selling, general and administrative expenses were $0.8 million for the three months ended May 31, 2017 in comparison to $0.9 million for the three months ended May 31, 2016. The decrease is primarily due to the lower expenses related to a decrease in professional fees and wages, partially offset by an increase in marketing and occupancy cost.
The Company had cash of $1.5 million as at May 31, 2017 compared to $2.4 million as at February 28, 2017. The decrease in cash during the three months ended May 31, 2017 was mainly a result of our ongoing expenditures in R&D and selling, general, and administrative expenses, which includes increased consulting fees incurred to prepare for the July 26, 2017 Advisory Committee meeting and an increase in purchases of plant and production equipment to support our generic Seroquel XR® launch, which were only partially offset by higher cash receipts from commercialized sales of our generic Focalin XR® and cash receipts provided from financing activities derived from common share sales under the Company’s at-the-market offering program.
As of July 11, 2017, our cash balance was $0.6 million. We currently expect to satisfy our operating cash requirements until September 2017 from cash on hand and quarterly profit share payments from Par and Mallinckrodt. Should our marketing and distribution partner, Mallinckrodt, soon be successful in fully commercializing our generic Seroquel XR® (all strengths of which were launched in June 2017), then we may be cash flow positive in the second half of 2017. Failing this, the Company may need to obtain additional funding prior to that time as we further the development of our product candidates and if we accelerate our product commercialization activities. There can be no assurance as to when or if Par will launch the remaining two strengths of its generic Focalin XR® and, if launched, whether they will be successfully commercialized, or if generic Seroquel XR® will be successfully commercialized. If necessary, we expect to utilize our at-the-market offering program to bridge any funding shortfall in the second half of 2017.
About Intellipharmaceutics
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. The Company’s patented Hypermatrix™ technology is a multidimensional controlled-release drug delivery platform that can be applied to the efficient development of a wide range of existing and new pharmaceuticals. Based on this technology platform, Intellipharmaceutics has developed several drug delivery systems and a pipeline of products (some of which have received FDA approval) and product candidates in various stages of development, including ANDAs filed with the FDA (and one Abbreviated New Drug Submission filed with Health Canada) in therapeutic areas that include neurology, cardiovascular, gastrointestinal tract, diabetes and pain.
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