Replies to post #241105 on Innovation Pharmaceuticals Inc (IPIX)

[TheDane]

It’s a statement of risk mandated by Sarbanes Oxley (sp?), way overplayed in my opinion. Suddenly everyone reads a 10-k cover to cover and gets their knickers in a twist. Part of the problem is that Leo set up expectations for a series of events to occur by X date and it looks likely the date could slip by. Or maybe it won’t.

Nobody knows. Educated guesses are still guesses.

My money is on success. If the Term Sheet signed with a GLOBAL BIOPHARMA! was announced in a PR by itself two weeks ago, prior to the 10-k, the stock would be well over a dollar. One wonders why Leo didn’t do that. Is it a sign of virtue that he didn’t play it that way or a dumb business move?

Time will tell.

[Cherry_11]

You do realize that a 10k or 10q has the “cya” literature in there right?!? They always provide worst case scenario...


Most of the folks posting aren’t invested in IPIX anyways and the others that are questioning management should sell and move on.


Pony up. Go IPIX$$

[loanranger]

"But have they ever mentioned it before in a k that we may never see results?"
I guess you're referring to this:
"There can be no assurance when or whether the Company will receive the statistical data from the Phase 2b trial."
It didn't appear in the last two 10-Ks but there may not have been an occasion for it (there may NEVER have been one). In looking for an example I ran across this in the 2016 10-K:

"Cellceutix has begun preparing for a Phase 2b trial of Prurisol for patients with moderate to severe plaque psoriasis in order to better define appropriate dosing to achieve greatest clinical responses. The Company expects to initiate the Phase 2b trial in the third or fourth quarter of calendar 2016 with interim analysis top-line results expected in the second quarter of 2017."

The trial was started in November of 2016. Rumor has it that trial delays are the rule and not the exception. I don't know when a delay becomes unreasonable but so far there have been five quarters worth.

It has been suggested that the statement might be consistent with boilerplate going concern language or a Sarbanes Oxley requirement and an issuer does have an obligation to lay out the "Risks Related to Our Business" (as the section requiring it is called).
The fact is it's unusual. The Company explains that "Results for our Phase 2b trial of Prurisol for the treatment of moderate to severe psoriasis have been delayed pending payment of amounts due to the research organization managing the trial." The combination of statements suggests that the Company may never get the results because the Company may never pay for them. No other explanation has been offered for the "or whether" part of the statement.

I suspect that the Company is sensitive, based on experience, to the possibility of legal action in general and specifically in the case of Prurisol, and used the language in the hope of mitigating against that possibility.
I don't know enough about this business to be sure, but I suspect that drug developers have been known to just stop talking about a given trial when it ran into a derailment for whatever reason and this may be IPIX's suggestion that that may be in the works. I also suspect that there might be different disclosure obligations for the abandonment of a trial prior to results versus the failure of a trial based on them.


Some concern has been expressed about the numbers so this is probably redundant, but....
I had the impression that most of the trial expenses had been incurred by 6/30.
As of 3/31 IPIX said that they had "contractual minimum commitments of approximately $1.0 million to contract research organizations". MY understanding of that term is uninformed but it sounds like the Company had agreed to have work done worth $1M that had yet to be done.
As of 6/30 the Company said it had "total non-cancelable contractual minimum commitments of approximately $4 million to contract research organizations as of June 30, 2018".
During the period from 3/31-6/30 the Company financials reflected that they incurred $1.8M in R&D expenses and I would think that that is where any CRO charges are reflected.
The text in the 10-K says "Expenditures on Prurisol were approximately $4.1 million during the year ended June 30, 2018."

One needs to be careful comparing the above numbers because some are on a cash basis and some aren't, but they do create the impression that something has gone wrong, either in the Company's assessments of costs or the CRO's billing of them. I don't think anyone would have expected IPIX to still require the CRO to need to do $4M worth of work as of 6/30 when the total costs for Prurisol in the entire previous year was $4.1M.


I suppose that there is another possible explanation. There's an assumption that that $4M in CRO commitments is all related to Prurisol. The Company has engaged two companies for the purpose of manufacturing Brilacidin and to formulate it in a sachet form for clinical trial purposes and IPIX COULD HAVE also engaged a CRO and made a financial commitment in anticipation of a P3 for B-OM. I doubt that's the case, though. It's not suggested in the 10-K and the word sachet doesn't even appear anywhere. Still, the total $4M may include CRO charges for other things but I don't know what they might be. I don't think any other trials were announced in the 10-K.