'IPCI' - (Intellipharmaceutics Announces 2012 Year End Results)
TORONTO, Jan 31, 2013 (GLOBE NEWSWIRE via COMTEX) -- Intellipharmaceutics
International Inc. (Nasdaq:IPCI) (TSX:I), 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 year ended November 30, 2012. All dollar
amounts referenced herein are in United States dollars unless otherwise noted.
The Company recorded a net loss for the year ended November 30, 2012 of $6.1
million, or $0.36 per common share, compared with a loss of $4.9 million, or
$0.33 per common share for the year ended November 30, 2011. The increased loss
can be attributed to an increase in stock-based compensation, a reduction in the
fair value adjustment of derivative liability, and a reduction in revenue in the
year ended 2012 compared to the prior year. This was partially offset by a nil
financing expense in the year ended November 30, 2012 compared to financing
expense of $2.4 million in the prior year related to the Company's February 2011
private placement financing. Stock-based compensation expense in the year ended
2012 was $2.4 million versus $0.7 million in the prior year. The fair v alue
adjustment of derivative liability in the year ended November 30, 2012 was $3.8
million versus $5.3 million in the prior year. Revenues related to the amendment
of the development and commercialization agreement with Par Pharmaceutical, Inc.
("Par") in the year ended November 30, 2012 was $0.1 million versus $0.5 million
in the prior year.
Loss from operations for the year ended November 30, 2012 was $10.1 million
compared with loss from operations of $7.8 million for the year ended November
30, 2011. Research and development ("R&D") expenditures in the year ended
November 30, 2012 increased to $6.0 million versus $5.1 million for the prior
year, primarily due to the increase in stock-based compensation for R&D
employees. After adjusting for stock-based compensation expense, expenditures
for R&D were effectively the same in both years. Selling, general and
administrative expenses in the year ended November 30, 2012 increased to $3.7
million versus $2.9 million in the prior year. After adjusting for stock-based
compensation expense, expenditures for selling, general and administrative
expenses were effectively the same in both years.
At November 30, 2012, Intellipharmaceutics' cash and cash equivalents totaled
$0.5 million, compared with $4.8 million at November 30, 2011. The decrease in
cash and cash equivalents during the year ended November 30, 2012 is mainly a
result of cash used in operating activities related to R&D activities and the
purchase of production, laboratory and computer equipment due to the
acceleration of product development activities.
For the year ended November 30, 2012 net cash flows used in operating activities
increased to $7.6 million compared to $7.0 million for the year ended November
30, 2011. The increase was due to the prior year cash payment from Par related
to the amendment of the development and commercialization agreement. During
these years the Company incurred similar cash expendi tures in R&D activities and
for selling, general and administrative expenses. For the year ended November
30, 2012 net cash flows from financing activities of $4.4 million compared to
$11.3 million in the year ended November 30, 2011. In the year ended November
30, 2012 the Company completed a registered direct common share offering for
gross proceeds of $5 million as compared to its prior year's completion of a
private placement financing of common stock and warrants for gross proceeds of
$12.0 million. For the year ended November 30, 2012 net cash flows used in
investing activities of $1.0 million compared to $0.3 million in the year ended
November 30, 2011. This increase related mainly to the purchase of production,
laboratory and computer equipment due to the acceleration of product development
activities.
Corporate Update
-- In November 2012, the Company announced the successful completion of a Phase
I clinical trial on our non-generic controlled-release formulation of
pregabalin. This was the first bioavailability study of our controlled-release
pregabalin versus Lyrica(R) (immediate release pregabalin). The study was
carried out in 14 subjects. The results showed that our 150 mg pregabalin
once-a-day dosage was comparable in bioavailability to Lyrica(R) 50 mg
three-times-a-day dosage. Pregabalin is indicated for the management of
neuropathic pain associated with diabetic peripheral neuropathy, postherpetic
neuralgia, spinal cord injury and fibromyalgia. According to Source Healthcare
Analytics, U.S. sales for the 12 months ended December 2012 for Lyrica(R)
(pregabalin capsules) were approximately $2.0 billion. There is no
controlled-release formulation on the market at this time. There can be no
assurance that additional clinical trials will meet our expectations, that we
will be successful in submitting a new drug application 505(b)(2) filing with
the United States Food and Drug Administration ("FDA"), that the FDA w ill
approve this product candidate for sale in the U.S. market, or that it will ever
be successfully commercialized.
-- In November 2012, the Company announced the achievement of another of its
previously announced development goals for 2012 with the completion of clinical
batch manufacturing of Rexista(TM) oxycodone, and the initiation of Phase I
studies of Rexista(TM) oxycodone. Preliminary Phase I data from this trial is
expected in early 2013. According to Source Healthcare Analytics, U.S. sales for
the 12 months ended December 2012 for OxyContin(R) were approximately $2.4
billion.
-- In January 2013, the Company completed a private placement financing (the
"Financing") of an unsecured convertible debenture (the "Debenture") in the
principal amount of $1.5 million, which will mature January 1, 2015. The
Debenture bears interest at a rate of 12% per annum, payable monthly, is
pre-payable at any time at the option of the Company, and is convertible at any
time into 500,000 common shares at a conversion price of $3.00 per common share
at the option of the holder. Dr. Isa Odidi, CEO and Co-Founder, and Dr. Amina
Odidi, COO and Co-Founder, of the Company provided the Company with the $1.5
million of the proceeds for the Debenture. The Financing was non-brokered and
the net proceeds are to be used for working capital and general corporate
purposes.
Intellipharmaceutics' goals for 2013 include the following:
-- Obtain FDA approval of our generic version of Focalin XR(R)
-- Obtain FDA approval of one or more additional ANDAs
-- File up to two additional ANDAs with the FDA
-- Establish one or more additional development/marketing alliances
-- Complete Phase I studies of Rexista(TM)oxycodone
-- Complete additional Phase I studies of controlled-release pregabalin
About Intellipharmaceutics
Intellipharmaceutics International Inc. is a pharmaceutical company specializing
in the research, d evelopment and manufacture of novel and generic
controlled-release and targeted-release oral solid dosage drugs. The Company's
patented Hypermatrix(TM) 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,
Intellipharmaceutics has a pipeline of product candidates in various stages of
development, including eight ANDAs filed with the FDA, in therapeutic areas that
include neurology, cardiovascular, gastrointestinal tract, diabetes and pain.
Certain statements in this document constitute "forward-looking statements"
within the meaning of the United States Private Securities Litigation Reform Act
of 1995 and/or "forward-looking information" under the Securities Act (Ontario).
These statements include, without limitation, statements expressed or implied
regarding our plans, goals and milestones, status of developments or
expenditures relating to our business, plans to fund our current activities,
statements concerning our partnering activities, health regulatory submissions,
strategy, future operations, future financial position, future sales, revenues
and profitability, projected costs, and market penetration. In some cases, you
can identify forward-looking statements by terminology such as "may," "will,"
"should," "expects," "plans," "anticipates," "believes," "estimates,"
"predicts," "potential," "continue," "intends," "could," or the negative of such
terms or other comparable terminology. We made a number of assumptions in the
preparation of our forward-looking statements. You should not place undue
reliance on our forward-looking statements, which are subject to a multitude of
known and unknown risks and uncertainties that could cause actual results,
future circumstances or events to differ materially from those stated in or
implied by the forward-looking statements. Risks, uncertainties and other
factors that could affect our actual results include, but are not limited to,
the effects of general economic conditions, securing and maintaining corporate
alliances, our estimates regarding our capital requirements, and the effect of
capital market conditions and other factors, including the current status of our
product development programs, on capital availability, the potential dilutive
effects of any future financing, our programs regarding research, development
and commercialization of our product candidates, the timing of such programs,
the timing, costs and uncertainties regarding obtaining regulatory approvals to
market our product candidates, and the timing and amount of any available
investment tax credits, the actual or perceived benefits to users of our drug
delivery technologies and product candidates as compared to others, our ability
to maintain and establish intellectual property rights in our drug delivery
technologies and product candidates, the actual size of the potential markets
for any of our product candidates compared to our market estimates, our
selection and licensing of product candidates, our ability to attract
distributors and collaborators with the ability to fund patent litigation and
with acceptable development, regulatory and commercialization expertise and the
benefits to be derived from such collaborative efforts, sources of revenues and
anticipated revenues, including contributions from distributors and
collaborators, product sales, license agreements and other collaborative efforts
for the development and commercialization of product candidates, our ability to
create an effective direct sales and marketing infrastructure for products we
elect to market and sell directly, the rate and degree of market acceptance of
our products, the timing and amount of insurance reimbursement for our products,
the success and pricing of other competing therapies that may become available,
our ability to retain and hire qualified employees, and the manufacturing
capacity of third-party manufacturers that we may use for our products.
Additional risks and uncertainties relating to the Company and our business can
be found in the "Risk Factors" section of our latest annual information form and
latest Form 20-F, as well as in our reports, public disclosure documents and
other filings with the securities commissions and other regulatory bodies in
Canada and the U.S. The forward-looking statements are made as of the date
hereof, and we disclaim any intention and have no obligation or responsibility,
except as required by law, to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.
The audited consolidated financial statements, accompanying notes to the audited
consolidated financial statements, and Management Discussion and Analysis for
the year ended November 30, 2012 will be accessible on Intellipharmaceutics
Website at www.intellipharmaceutics.com and will be available on SEDAR and
EDGAR.
Summary financial tables are provided below.
&n bsp;
Intellipharmaceutics International Inc.
Consolidated balance sheets
As at November 30, 2012 and 2011
(Stated in U.S. dollars)
2012 2011
& nbsp; $ $
Assets
Current
Cash and cash equivalents 497,016 4,817,088
Accounts receivable 2,778 3,383
Investment tax credits 301,932 349,861
Prepaid expenses, sundry and other assets 137,449 124,982
939,175 5,295,314
Property and equipment, net 1,535,703 951,914
2,474,878 6,247, 228
Liabilities
Current
Accounts payable 512,360 554,210
Accrued liabilities 224,797 436,154
Employee costs payable &nbs p; 663,222 736,073
Current portion of capital lease obligations 51,524 43,383
Due to related parties 783,717 757,126
2,235,620 2,526,946
Deferred revenue -- 107,091
Capital lease obligations 46,242&n bsp; 95,206
Warrant liability 1,960,893 6,611,015
4,242,755 9,340,258
Shareholders' deficiency
Capital stock
Auth orized
Unlimited common shares without par value
Unlimited preference shares
Issued and outstanding
17,906,937 common shares 147,152 147,152
(2011 - 15,908,444)
Addit ional paid-in capital 28,409,665 20,822,672
Accumulated other comprehensive loss (240,010) (115,035)
Accumulated deficit (30,084,684) (23,947,819)
(1,767,877) (3,093,030)
Contingencies
2,474,878 6,247,228
&nbs p;
Intellipharmaceutics International Inc.
Consolidated statements of operations and comprehensive loss
for the years ended November 30, 2012, 2011 and 2010 & nbsp;
(Stated in U.S. dollars)
2012 2011 2010
$ &n bsp; $ $
Revenue
Research and development 107,091 501,814 1,459,385
107,091 &nb sp; 501,814 1,459,385
Expenses
Research and development 5,992,417 5,125,608 4,533,310
Selling, general and administrative 3,672,313 2,925,454 2,699,204
Depreciation 452,303 227,456 242,778
Write-down on long lived assets 107,123 -- 36,481
10,224,156 8,278,518 7,511,773
Loss from operations (10,117,065) &n bsp; (7,776,704) (6,052,388)
Fair value adjustment of derivative liabilty 3,841,233 5,346,878 223,782
Financing expense -- (2,357,732) --
Net foreign exchange gain (loss) 181,682 (70,036) 138,949
Interest income 20,691 60,790 27,001
Interest expense (63,406) (83,473) (98,435)
Loss (6,136,865) (4,880,277) (5,761,091)
Other comprehensive (loss) income
Foreign exchange translation adjustment (124,975) 110,441 116,368
Comprehensive loss (6,261,840) (4,769,836) (5,644,723)
Loss per common share, basic and diluted (0.36) &n bsp; (0.33) (0.53)
Weighted average number of common
shares outstanding, basic and diluted 17,258,686 14,994,118 10,907,054
Intellipharmaceutics International Inc.
Consolidated statements of cash flows
for the years ended November 30, 2012, 2011 and 2010 & nbsp;
(Stated in U.S. dollars)
2012 2011 2010
$ $ $
&nbs p;
Loss (6,136,865) (4,880,277) (5,761,091)
Items not affecting cash
Depreciation 452,303 227,456 242,778
Stock-based compensation ; 2,323,845 702,460 1,023,626
Deferred share units 36,727 33,101 12,426
Interest accrual 45,278 7,739 95,113
Investment tax credit written off 39,170 -- 26,832
Fair value adjustment of derivative liability (3,841,233) (5,346,878) (223,782)
Write-down on long lived assets 107,123 &nbs p; -- 36,481
Financing expense -- 884,587 --
Unrealized foreign exchange (gain) loss (145,724) 203,604 195,361
Change in non-cash operating assets & liabilities &n bsp;
Accounts receivable 605 (1,764) 3,808
Investment tax credits 57,094 869,406 675,461
Prepaid expenses and sundry assets (10,206) 17,189 36,776
Accounts payable and accrued liabilities (475,387) 203,743 (1,117,563)
Deferred revenue (107,091) 98,186 &nbs p; (1,440,421)
Cash flows used in operating activities (7,654,361) (6,981,448) (6,194,195)
Financing activities
Payments to related parties -- (801,551) (860,703)
Repayment of capital lease obligations ; (44,364) (22,452) (36,317)
Deferred offering cost -- -- (9,981)
Issuance of common shares on exercise of stock options -- 93,165 --
Proceeds from issuance of shares and warrants, gross -- 12,000,000 --
Proceeds from issuance of shares on exercise of warrants 187,500 -- --
Proceeds from issuance of shares, gross 5,000,000 -- -- &nbs p;
Share issuance cost (779,271) -- --
Cash flows provided from (used in) financing activities 4,363,865 11,269,162 (907,001)
Investing activity
Purchase of property and equipment & nbsp; (1,036,092) (262,142) (133,878)
Cash flows used in investing activities (1,036,092) (262,142) (133,878)
Effect of foreign exchange gain on &n bsp;
cash held in foreign currency 6,516 2,380 9,718
(Decrease) increase in cash and cash equivalents (4,320,072) 4,027,952 (7,225,356)
Cash and cash equivalents, beginning of period 4,817,088 789,136 8,014,492
& nbsp; &
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