TORONTO, Oct. 7, 2011 (GLOBE NEWSWIRE) -- 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 three and nine months ended August 31, 2011. All dollar amounts referenced herein are in United States dollars unless otherwise noted.
The net income for the three months ended August 31, 2011 was $1.1 million, or $0.05 per diluted common share, compared with a loss of $2.1 million, or $0.19 per common share for the three month period ended August 31, 2010. The loss for the nine months ended August 31, 2011 was $3.6 million, or $0.24 per common share, compared with a loss of $3.9 million, or $0.35 per common share for the nine months ended August 31, 2010. The net income during the third quarter of 2011, when compared to the loss in the third quarter of 2010, can be attributed to the fair value adjustment of the derivative liability, as described below, and revenue from the amendment of the existing development and commercialization agreement between the Company and Par Pharmaceutical, Inc. to include additional strengths of Focalin XR® generic products. Under the terms of the expanded agreement, Intellipharmaceutics received a cash payment from Par and will continue to receive a share of profits from any future sales of our generic versions of Focalin XR®. Revenue of $0.5 million was recognized from the $0.6 million cash payment received mainly related to a developed generic product. The fair value adjustment of the derivative liability for the three months ended August 31, 2011 was $2.5 million versus nil in the comparable period. This adjustment relates to the issuance of warrants from the February 2011 private placement financing.
Loss from operations for the three months ended August 31, 2011 was $1.4 million compared with loss from operations of $2.1 million for the three months ended August 31, 2010. Research and development expenditures for the three months ended August 31, 2011 decreased to $1.2 million, compared to $1.5 million for the comparative period, primarily due to higher stock option expenses for performance-based options that were issued in the prior period; the options related to research and development activities that lead to an Abbreviated New Drug Application ("ANDA") being filed. After adjusting for stock options expenses, research and development expenditures for the three months ended August 31, 2011 increased $0.2 million due to additional development activities. Selling, general and administrative expenses for the three months ended August 31, 2011 increased to $0.6 million versus $0.5 million in the comparative period.
At August 31, 2011, Intellipharmaceutics' cash totaled $7.1 million, compared with $8.5 million at May 31, 2011. The decrease in cash and cash equivalents during the three months ended August 31, 2011 is mainly a result of cash used in operating activities related to research and development activities.
Intellipharmaceutics anticipates that its burn rate, namely its cash flows used in operating activities, will be approximately $1.8 million during the remainder of fiscal 2011. Depending on the progress of ongoing partnering initiatives, the Company may elect to increase or reduce expenses associated with its current development plan.
Corporate Update
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On June 21, 2011, Intellipharmaceutics announced that the Company and Wyeth LLC, a wholly owned subsidiary of Pfizer Inc., have settled the patent infringement litigation in the United States District Court for the Southern District of New York, relating to Intellipharmaceutics' generic version of Effexor XR® (venlafaxine hydrochloride extended-release) capsules. Under the terms and conditions of the Settlement Agreement, Intellipharmaceutics has been granted a non-exclusive license to the patents in suit that will permit Intellipharmaceutics to launch a generic of Effexor XR® in the United States following U.S. Food and Drug Administration ("FDA") approval of this product. There can be no assurance that such approval will be granted. Sales of Effexor XR® and generic versions of Effexor XR® in the U.S. were approximately $2.6 billion for the 12 months ending August 2011.
- On August 18, 2011, Intellipharmaceutics announced that additional strengths of generic Focalin XR® were added to the existing development and commercialization agreement between the Company and Par Pharmaceutical Inc., which applied to the development and commercialization of the 5, 10, 15 and 20mg strengths of generic Focalin XR®. Under the terms of the expanded agreement, Intellipharmaceutics received a cash payment from Par and will continue to receive a share of profits from any future sales of our generic versions of Focalin XR®. According to Wolters Kluwer Health, U.S. sales of Focalin XR® were approximately $553 million for the 12 months ending August 2011.
About Intellipharmaceutics
Intellipharmaceutics International Inc. is a pharmaceutical company specializing in the research, development and manufacture of novel or generic controlled-release and targeted-release oral solid dosage drugs. The Company's patented Hypermatrix™ technology is a unique and validated 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 products in various stages of development, including five ANDAs under review by the FDA, in therapeutic areas that include neurology, cardiovascular, GIT, pain and infection.
The Intellipharmaceutics International Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=6957
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 regarding the Company's plans 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 revenues and projected costs. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "expects", "plans", "anticipates", "believes", "estimated", "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 these forward-looking statements. You should not place undue reliance on our forward-looking statements, which are subject to a multitude of 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. These risks and uncertainties include, but are not limited to, securing and maintaining corporate alliances, the need for additional capital and the effect of capital market conditions and other factors, including the current status of our programs, on capital availability, the potential dilutive effects of any financing , the timing of our programs to research, develop and commercialize our products, the timing, costs and uncertainties regarding obtaining regulatory approvals to market our product candidates, our estimates regarding our capital requirements and future revenues, the timing and amount of investment tax credits, and other risks and uncertainties detailed from time to time in our public disclosure documents or other filings with the securities commissions or other securities regulatory bodies in Canada and the U.S. Additional risks and uncertainties relating to IPC and our business can be found in the "Risk Factors" section of our annual information form dated February 28, 2011 and Form 20-F for the year ended November 30, 2010, as well as in our other public filings. 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 condensed unaudited interim consolidated financial statements, accompanying notes to the condensed unaudited interim consolidated financial statements, and Management's Discussion and Analysis for the three and nine month periods ended August 31, 2011, will be accessible on Intellipharmaceutics Website at www.intellipharmaceutics.com and will be available on SEDAR and EDGAR.
Summary financial tables are provided below.
| Intellipharmaceutics International Inc. | ||
| Condensed unaudited interim consolidated balance sheets | ||
| As at | ||
| (Stated in U.S. dollars) | ||
| August 31 | November 30 | |
| 2011 | 2010 | |
| $ | $ | |
| Assets | ||
| Current | ||
| Cash | 7,053,644 | 789,136 |
| Accounts receivable | 6,290 | 1,619 |
| Investment tax credits | 638,740 | 1,184,345 |
| Prepaid expenses, sundry and other assets | 265,400 | 142,379 |
| 7,964,074 | 2,117,479 | |
| Deferred offering cost | -- | 224,673 |
| Property and equipment, net | 1,061,702 | 925,554 |
| 9,025,776 | 3,267,706 | |
| Liabilities | ||
| Current | ||
| Accounts payable | 713,137 | 612,957 |
| Accrued liabilities | 275,373 | 321,030 |
| Employee cost payable | 629,106 | 575,625 |
| Current portion of capital lease obligations | 1,024 | 13,230 |
| Due to related parties | 1,422,102 | 1,635,842 |
| Deferred revenue | 107,091 | 8,905 |
| 3,147,833 | 3,167,589 | |
| Warrant liability | 8,290,747 | 7,161 |
| 11,438,580 | 3,174,750 | |
| Shareholders' (deficiency) equity | ||
| Capital stock | ||
| Authorized | ||
| Unlimited common shares without par value | ||
| Unlimited preference shares | ||
| Issued and outstanding | ||
| 15,908,444 common shares | 147,152 | 16,969 |
| (2010 - 10,907,054) | ||
| Additional paid-in capital | 20,465,837 | 19,369,005 |
| Accumulated other comprehensive loss | (363,105) | (225,476) |
| Deficit | (22,662,688) | (19,067,542) |
| (2,412,804) | 92,956 | |
| Contingencies | ||
| 9,025,776 | 3,267,706 | |
| Intellipharmaceutics International Inc. | ||||
| Condensed unaudited interim consolidated statements of operations and comprehensive income (loss) | ||||
| (Stated in U.S. dollars) | ||||
| Three Months ended | Nine Months ended | |||
| August 31, 2011 | August 31, 2010 | August 31, 2011 | August 31, 2010 | |
| $ | $ | $ | $ | |
| Revenue | ||||
| Research and development | 501,814 | -- | 501,814 | 1,452,221 |
| Expenses | ||||
| Research and development | 1,237,291 | 1,483,128 | 3,861,206 | 3,357,554 |
| Selling, general and administrative | 566,423 | 526,644 | 2,009,856 | 1,913,301 |
| Depreciation | 61,332 | 62,531 | 165,677 | 178,414 |
| 1,865,046 | 2,072,303 | 6,036,739 | 5,449,269 | |
| Loss from operations | (1,363,232) | (2,072,303) | (5,534,925) | (3,997,048) |
| Fair value adjustment of derivative liabilty | 2,536,680 | 32,376 | 4,137,626 | 164,397 |
| Financing expense | -- | -- | (2,357,732) | -- |
| Net foreign exchange (loss) gain | (71,068) | (51,413) | 184,451 | 23,542 |
| Interest income | 15,200 | 1,938 | 40,798 | 25,672 |
| Interest expense | (20,449) | (24,060) | (65,364) | (74,025) |
| Net income (loss) | 1,097,131 | (2,113,462) | (3,595,146) | (3,857,462) |
| Other comprehensive income (loss) | ||||
| Foreign exchange translation adjustment | 45,306 | 28,588 | (137,629) | 65,841 |
| Comprehensive income (loss) | 1,142,437 | (2,084,874) | (3,732,775) | (3,791,621) |
| Income (loss) per common share | ||||
| Basic | 0.07 | (0.19) | (0.24) | (0.35) |
| Diluted | 0.05 | (0.19) | (0.24) | (0.35) |
| Weighted average number of common | ||||
| shares outstanding | ||||
| Basic | 15,906,954 | 10,907,057 | 14,690,454 | 10,907,057 |
| Diluted | 23,913,466 | 10,907,057 | 14,690,454 | 10,907,057 |
| Intellipharmaceutics International Inc. | ||||
| Condensed unaudited interim consolidated statements of cash flows | ||||
| (Stated in U.S. dollars) | ||||
| Three months ended | Nine months ended | |||
| August 31, 2011 | August 31, 2010 | August 31, 2011 | August 31, 2010 | |
| $ | $ | $ | $ | |
| Net income (loss) | 1,097,131 | (2,113,462) | (3,595,146) | (3,857,462) |
| Items not affecting cash | ||||
| Depreciation | 61,332 | 62,531 | 165,677 | 178,414 |
| Stock-based compensation | 72,907 | 456,632 | 685,570 | 904,213 |
| Interest accrual | 20,368 | 23,369 | 65,140 | 71,198 |
| Fair value adjustment of derivative liability | (2,536,680) | (32,376) | (4,137,627) | (164,397) |
| Financing expense | -- | -- | 884,587 | -- |
| Unrealized foreign exchange (gain) loss | (132,472) | 29,336 | 113,414 | 173,675 |
| Change in non-cash operating assets & liabilities | ||||
| Accounts receivable | (4,440) | (153) | (4,547) | 2,896 |
| Investment tax credits | 137,089 | 11,296 | 603,113 | 741,490 |
| Prepaid expenses, sundry and other assets | 23,859 | (23,915) | (120,075) | 25,967 |
| Accounts payable and accrued liabilities | (129,976) | (72,591) | 62,951 | (1,268,697) |
| Deferred revenue | 98,186 | -- | 98,186 | (1,440,421) |
| Cash flows used in operating activities | (1,292,696) | (1,659,333) | (5,178,757) | (4,633,124) |
| Financing activities | ||||
| Payments due to related parties | -- | -- | (351,229) | (860,104) |
| Repayment of capital lease obligations | (2,884) | (9,557) | (12,852) | (27,448) |
| Issuance of common shares on exercise of stock options | -- | -- | 90,818 | -- |
| Proceeds from issuance of shares and warrants, gross | -- | -- | 12,000,000 | -- |
| Cash flows (used in) from financing activities | (2,884) | (9,557) | 11,726,737 | (887,552) |
| Investing activity | ||||
| Purchase of property and equipment | (124,542) | (1,774) | (302,045) | (118,389) |
| Cash flows used in investing activities | (124,542) | (1,774) | (302,045) | (118,389) |
| Effect of foreign exchange (loss) gain on | ||||
| cash held in foreign currency | (4,504) | (42,712) | 18,573 | (20,023) |
| (Decrease) increase in cash | (1,424,626) | (1,713,376) | 6,264,508 | (5,659,088) |
| Cash and cash equivalents, beginning of period | 8,478,270 | 4,068,780 | 789,136 | 8,014,492 |
| Cash, end of period | 7,053,644 | 2,355,404 | 7,053,644 | 2,355,404 |
| Supplemental cash flow information | ||||
| Interest paid | -- | -- | 113,940 | 105,903 |
| Taxes paid | -- | -- | -- | -- |