TORONTO, ON / ACCESSWIRE / February 28, 2020 / Intellipharmaceutics International Inc. (OTCQB:IPCIF and 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 year ended November 30, 2019. All dollar amounts referenced herein are in United States dollars unless otherwise noted.
Results of Operations
The Company recorded net loss for the year ended November 30, 2019 of $8.1 million or $0.37 per common share, compared with a net loss of $13.8 million or $2.89 per common share for the year ended November 30, 2018. In the year ended November 30, 2019, the lower net loss is attributed to the higher recognition of Mallinckrodt upfront fees due to the change in contract term with Mallinckrodt which was terminated effective August 15, 2019 compared to the original ten-year term combined with increased administrative expense related to professional and legal fees and decreased R&D expenses. In the year ended November 30, 2018, the net loss was attributed to lower recognition of Mallinckrodt upfront fees combined with increased R&D expenses.
The Company recorded revenues of $3.4 million for the year ended November 30, 2019 versus $1.7 million for the year ended November 30, 2018. Licensing revenue consisted primarily of commercial sales of the 5, 10, 15, 20, 25, 30, 35 and 40 mg strengths of generic Focalin XR® under the Par agreement. The higher increased revenue in the year ended November 30, 2019 compared to year ended November 30, 2018 is primarily due to the change in contract term with Mallinckrodt that terminated on August 15, 2019, and the recognition of up-front fees on the termination of the Mallinckrodt agreement.
Expenditures for R&D for the year ended November 30, 2019 were lower by $4.2 million compared to the year ended November 30, 2018. The decrease is primarily due to significantly lower expenditures in clinical and other biostudies, stock-based compensation as well as patent litigation expenses partially offset by higher third-party consulting fees.
Selling, general and administrative expenses were $4.2 million for the year ended November 30, 2019 in comparison to $3.5 million increase is due to higher expenses related to administrative costs partially offset by a decrease in marketing cost and wages and benefits.
The Company had cash of $0.065 million as at November 30, 2019 compared to $6.6 million as at November 30, 2018. The decrease in cash was mainly due to expenditures for R&D and selling, general, and administrative expenses which are partially offset by receipt from Par and cash inflow provided from financing activities. The increase in cash during the year ended November 30, 2018 was mainly due to the cash receipts provided from financing activities derived from the Company’s two registered direct offering in March 2018, the 2018 Debenture financing in September 2018 and an underwritten public offering in October 2018, offset by ongoing expenditures in R&D and selling, general and administrative expenses.
As of November 30, 2018, the Company had a cash balance of $6.6 million. As of November 30, 2019, our cash balance was $64,622. While we expect to satisfy certain short-term capital needs from upfront payments for development agreements, sale of one or more approved ANDAs, possible strategic investments in the near term, and other ongoing business development activities, we need to obtain additional funding as we further the development of our product candidates. Potential sources of capital may include payments from licensing agreements, cost savings associated with managing operating expense levels, equity and/or debt financings and/or new strategic partnership agreements which fund some or all costs of product development. We intend to utilize the capital markets to bridge any funding shortfall and to provide capital to continue to advance our most promising product candidates. Our future operations are highly dependent upon our ability to source additional capital to support advancing our product pipeline through continued R&D activities and to fund any significant expansion of our operations. Our ultimate success will depend on whether our product candidates receive the approval of the FDA or Health Canada and whether we are able to successfully market approved products. We cannot be certain that we will be able to receive FDA or Health Canada approval for any of our current or future product candidates, that we will reach the level of sales and revenues necessary to achieve and sustain profitability, or that we can secure other capital sources on terms or in amounts sufficient to meet our needs or at all.
There can be no assurance that the products licensed under the Tris Pharma agreement 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 our Oxycodone ER product candidate, that the FDA will approve any of our requested abuse-deterrent label claims or that the FDA will meet its deadline for review and ultimately approve the NDA for the sale of our Oxycodone ER product candidate in the U.S. market, 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, that any of our products or product candidates will receive regulatory approval for sale in other jurisdictions, or that any of our products will ever be successfully commercialized and produce significant revenue for us, or that the litigation cases can be resolved in our favor. Moreover, there can be no assurance that any cannabidiol-based product candidates we develop will ever be successfully commercialized or produce significant revenue for us.
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 a wide range of existing and new pharmaceuticals. Intellipharmaceutics has developed several drug delivery systems based on this technology platform, with a pipeline of products (some of which have received FDA approval) in various stages of development. The Company has ANDA and NDA 505(b)(2) drug product candidates in its development pipeline. These include the Company’s Oxycodone ER based on its proprietary nPODDDS™ novel Point Of Divergence Drug Delivery System (for which an NDA has been filed with the FDA), and Regabatin™ XR (pregabalin extended-release capsules).
Cautionary Statement Regarding Forward-Looking Information
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 expectations , plans, goals and milestones, status of developments or expenditures relating to our business, plans to fund our current activities, and statements concerning our partnering activities, health regulatory submissions, strategy, future operations, future financial position, future sales, revenues and profitability, projected costs and market penetration and risks or uncertainties arising from the delisting of our shares from Nasdaq and our ability to comply with OTCQB and TSX requirements. In some cases, you can identify forward-looking statements by terminology such as “appear,” “unlikely,” “target,” “may,” “will,” “should,” “expects,” “plans,” “plans to,” “anticipates,” “believes,” “estimates,” “predicts,” “confident,” “prospects,” “potential,” “continue,” “intends,” “look forward,” “could,” “would,” “projected,” “goals” ,”set to,” “seeking” 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, capital availability, the estimated proceeds (and the expected use of any proceeds) we may receive from any offering of our securities, the potential dilutive effects of any future financing, potential liability from and costs of defending pending or future litigation, 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 difficulty in predicting the timing and results of any product launches, the timing and amount of profit-share payments from our commercial partners, and the timing and amount of any available investment tax credits, the actual or perceived benefits to users of our drug delivery technologies, products and product candidates as compared to others, our ability to establish and maintain valid and enforceable intellectual property rights in our drug delivery technologies, products and product candidates, the scope of protection provided by intellectual property rights for our drug delivery technologies, products and product candidates, recent and future legal developments in the United States and elsewhere that could make it more difficult and costly for us to obtain regulatory approvals for our product candidates and negatively affect the prices we may charge, increased public awareness and government scrutiny of the problems associated with the potential for abuse of opioid based medications, pursuing growth through international operations could strain our resources, our limited manufacturing, sales, marketing and distribution capability and our reliance on third parties for such, the actual size of the potential markets for any of our products and product candidates compared to our market estimates, our selection and licensing of products and product candidates, our ability to attract distributors and/or commercial partners with the ability to fund patent litigation and with acceptable product 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 commercial partners, 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, delays in product approvals that may be caused by changing regulatory requirements, the difficulty in predicting the timing of regulatory approval and launch of competitive products, the difficulty in predicting the impact of competitive products on sales volume, pricing, rebates and other allowances, the number of competitive product entries, and the nature and extent of any aggressive pricing and rebate activities that may follow, the inability to forecast wholesaler demand and/or wholesaler buying patterns, seasonal fluctuations in the number of prescriptions written for our generic Focalin XR® capsules which may produce substantial fluctuations in revenue, the timing and amount of insurance reimbursement regarding our products, changes in laws and regulations affecting the conditions required by the FDA for approval, testing and labeling of drugs including abuse or overdose deterrent properties, and changes affecting how opioids are regulated and prescribed by physicians, changes in laws and regulations, including Medicare and Medicaid, affecting among other things, pricing and reimbursement of pharmaceutical products, the effect of recent changes in U.S. federal income tax laws, including but not limited to, limitations on the deductibility of business interest, limitations on the use of net operating losses and application of the base erosion minimum tax, on our U.S. corporate income tax burden, the success and pricing of other competing therapies that may become available, our ability to retain and hire qualified employees, the availability and pricing of third-party sourced products and materials, challenges related to the development, commercialization, technology transfer, scale-up, and/or process validation of manufacturing processes for our products or product candidates, the manufacturing capacity of third-party manufacturers that we may use for our products, potential product liability risks, the recoverability of the cost of any pre-launch inventory, should a planned product launch encounter a denial or delay of approval by regulatory bodies, a delay in commercialization, or other potential issues, the successful compliance with FDA, Health Canada and other governmental regulations applicable to us and our third party manufacturers’ facilities, products and/or businesses, our reliance on commercial partners, and any future commercial partners, to market and commercialize our products and, if approved, our product candidates, difficulties, delays or changes in the FDA approval process or test criteria for ANDAs and NDAs, challenges in securing final FDA approval for our product candidates, including our oxycodone hydrochloride extended release tablets product candidate, in particular, if a patent infringement suit is filed against us with respect to any particular product candidates (such as in the case of Oxycodone ER), which could delay the FDA’s final approval of such product candidates, healthcare reform measures that could hinder or prevent the commercial success of our products and product candidates, the risk that the FDA may not approve requested product labeling for our product candidate(s) having abuse-deterrent properties and targeting common forms of abuse (oral, intra-nasal and intravenous), risks associated with cyber-security and the potential for vulnerability of our digital information or the digital information of a current and/or future drug development or commercialization partner of ours, and risks arising from the ability and willingness of our third-party commercialization partners to provide documentation that may be required to support information on revenues earned by us from those commercialization partners. Additional risks and uncertainties relating to us and our business can be found in the “Risk Factors” section of our latest annual information form, our latest Form 20-F, and our latest Form F-1 and F-3 registration statements (including any documents forming a part thereof or incorporated by reference therein), as amended, 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., which are available on www.sedar.com and www.sec.gov. The forward-looking statements reflect our current views with respect to future events and are based on what we believe are reasonable assumptions as of the date of this document 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.
Trademarks used herein are the property of their respective holders.
Unless the context otherwise requires, all references (i) to “we,” “us,” “our,” “Intellipharmaceutics,” and the “Company” refer to Intellipharmaceutics International Inc. and its subsidiaries and (ii) in this document to share amounts, per share data, share prices, exercise prices and conversion rates have been adjusted to reflect the effect of the 1-for-10 reverse split which became effective on each of Nasdaq and TSX at the open of market on September 14, 2018. The common shares of the Company are currently traded on the OTCQB and the TSX.
Nothing contained in this document should be construed to imply that the results discussed herein will necessarily continue into the future or that any conclusion reached herein will necessarily be indicative of our actual operating results.
The condensed unaudited interim consolidated financial statements, accompanying notes to the condensed unaudited interim consolidated financial statements, and Management Discussion and Analysis for the year ended November 30, 2019 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.
Consolidated balance sheets
As at November 30, 2019 and 2018
(Stated in U.S. dollars)
|
2019 | 2018 | ||||||
|
$ | $ | ||||||
|
||||||||
Assets
|
||||||||
Current
|
||||||||
Cash
|
64,622 | 6,641,877 | ||||||
Accounts receivable, net
|
177,202 | 239,063 | ||||||
Investment tax credits
|
775,736 | 998,849 | ||||||
Prepaid expenses, sundry and other assets
|
156,616 | 586,794 | ||||||
Inventory
|
349,131 | 251,651 | ||||||
|
1,523,307 | 8,718,234 | ||||||
|
||||||||
Property and equipment, net
|
2,273,406 | 2,755,993 | ||||||
|
3,796,713 | 11,474,227 | ||||||
|
||||||||
Liabilities
|
||||||||
Current
|
||||||||
Accounts payable
|
3,757,018 | 2,643,437 | ||||||
Accrued liabilities
|
927,698 | 353,147 | ||||||
Employee costs payable
|
893,864 | 222,478 | ||||||
Income tax payable
|
5,678 | – | ||||||
Promissory notes payable
|
159,863 | – | ||||||
Convertible debentures
|
1,744,813 | 1,790,358 | ||||||
Deferred revenue
|
– | 300,000 | ||||||
|
7,488,934 | 5,309,420 | ||||||
|
||||||||
Deferred revenue
|
– | 2,062,500 | ||||||
|
7,488,934 | 7,371,920 | ||||||
|
||||||||
Shareholders’ equity (deficiency)
|
||||||||
Capital stock
|
||||||||
Authorized
|
||||||||
Unlimited common shares without par value
|
||||||||
Unlimited preference shares
|
||||||||
Issued and outstanding
|
||||||||
22,085,856 common shares
|
45,561,222 | 44,327,952 | ||||||
(November 30, 2018 – 18,252,243)
|
||||||||
Additional paid-in capital
|
44,167,721 | 45,110,873 | ||||||
Accumulated other comprehensive income
|
284,421 | 284,421 | ||||||
Accumulated deficit
|
(93,705,585 | ) | (85,620,939 | ) | ||||
|
(3,692,221 | ) | 4,102,307 | |||||
|
||||||||
|
3,796,713 | 11,474,227 | ||||||
Intellipharmaceutics International Inc.
Consolidated statements of operations and comprehensive loss
For the years ended November 30, 2019, 2018 and 2017
(Stated in U.S. dollars)
|
2019 | 2018 | 2017 | |||||||||
|
$ | $ | $ | |||||||||
Revenue
|
||||||||||||
Licensing
|
1,114,031 | 1,370,607 | 5,025,350 | |||||||||
Up-front fees
|
2,366,485 | 342,124 | 479,102 | |||||||||
|
3,480,516 | 1,712,731 | 5,504,452 | |||||||||
|
||||||||||||
Cost of good sold
|
||||||||||||
Cost of goods sold
|
33,068 | 124,870 | 704,006 | |||||||||
|
||||||||||||
Gross Margin
|
3,447,448 | 1,587,861 | 4,800,446 | |||||||||
|
||||||||||||
Expenses
|
||||||||||||
Research and development
|
6,608,794 | 10,827,293 | 9,271,353 | |||||||||
Selling, general and administrative
|
4,167,801 | 3,476,450 | 3,287,914 | |||||||||
Depreciation
|
505,803 | 610,384 | 506,961 | |||||||||
|
11,282,398 | 14,914,127 | 13,066,228 | |||||||||
|
||||||||||||
Loss from operations
|
(7,834,950 | ) | (13,326,266 | ) | (8,265,782 | ) | ||||||
|
||||||||||||
Net foreign exchange (loss) gain
|
(25,498 | ) | 8,592 | (80,093 | ) | |||||||
Interest income
|
13,535 | 227 | 15,037 | |||||||||
Interest expense
|
(247,516 | ) | (255,231 | ) | (389,239 | ) | ||||||
Financing cost
|
– | (174,802 | ) | (137,363 | ) | |||||||
Gain on settlement of convertible debt
|
4,419 | – | – | |||||||||
Net loss before income taxes
|
(8,090,010 | ) | (13,747,480 | ) | (8,857,440 | ) | ||||||
|
||||||||||||
Provision for income taxes
|
||||||||||||
Current tax expense
|
5,678 | – | – | |||||||||
Deferred tax recovery
|
(11,042 | ) | – | – | ||||||||
Net loss and comprehensive loss
|
(8,084,646 | ) | (13,747,480 | ) | (8,857,440 | ) | ||||||
|
||||||||||||
Loss per common share, basic and diluted
|
(0.37 | ) | (2.89 | ) | (2.86 | ) | ||||||
|
||||||||||||
Weighted average number of common
|
||||||||||||
shares outstanding, basic and diluted
|
21,580,059 | 4,762,274 | 3,101,448 | |||||||||
Intellipharmaceutics International Inc.
Consolidated statements of cash flows
For the years ended November 30, 2019, 2018 and 2017
(Stated in U.S. dollars)
|
2019 | 2018 | 2017 | |||||||||
|
$ | $ | $ | |||||||||
Net loss
|
(8,084,646 | ) | (13,747,480 | ) | (8,857,440 | ) | ||||||
Items not affecting cash
|
||||||||||||
Depreciation
|
506,685 | 612,736 | 520,838 | |||||||||
Financing cost
|
– | 174,802 | 137,363 | |||||||||
Provision for doubtful debts
|
(66,849 | ) | – | 66,849 | ||||||||
Stock-based compensation
|
264,568 | 927,686 | 1,749,999 | |||||||||
Deferred share units
|
– | 7,565 | 30,355 | |||||||||
Accreted interest on convertible debenture
|
54,469 | 66,560 | 219,497 | |||||||||
Gain on settlement of convertible debt
|
(4,419 | ) | – | – | ||||||||
Deferred income tax recovery
|
(11,042 | ) | – | – | ||||||||
Unrealized foreign exchange loss
|
57,189 | 52,613 | 56,998 | |||||||||
|
||||||||||||
Change in non-cash operating assets & liabilities
|
||||||||||||
Accounts receivable
|
61,861 | 450,556 | (283,994 | ) | ||||||||
Investment tax credits
|
223,113 | (362,360 | ) | 44,647 | ||||||||
Inventory
|
(97,480 | ) | (135,984 | ) | (115,667 | ) | ||||||
Prepaid expenses, sundry and other assets
|
430,178 | (361,702 | ) | 175,550 | ||||||||
Accounts payable, accrued liabilities and employee costs payable
|
2,359,518 | 106,048 | 599,220 | |||||||||
Income tax payable
|
5,678 | – | – | |||||||||
Deferred revenue
|
(2,362,500 | ) | (300,000 | ) | (450,000 | ) | ||||||
Cash flows used in operating activities
|
(6,663,677 | ) | (12,508,960 | ) | (6,105,785 | ) | ||||||
|
||||||||||||
Financing activities
|
||||||||||||
Repayment of principal on convertible debenture
|
(461,920 | ) | – | (150,000 | ) | |||||||
Proceeds from promissory notes payable
|
159,863 | – | – | |||||||||
Proceeds from shares to be issued from exercise of Pre-Funded Warrants
|
– | 10,300 | – | |||||||||
Proceeds from issuance of shares and warrants
|
– | 19,644,906 | 4,000,000 | |||||||||
Proceeds from issuance of shares on exercise of warrants
|
27,953 | 111,253 | 324,258 | |||||||||
Repayment of capital lease obligations
|
– | – | (14,829 | ) | ||||||||
Issurance of shares on exercise of stock options
|
– | – | 1,742 | |||||||||
Issurance of common shares on at-the-market financing, gross
|
– | – | 2,541,640 | |||||||||
Debenture financing, net
|
375,000 | 500,000 | – | |||||||||
Offering costs
|
– | (2,911,505 | ) | (1,020,643 | ) | |||||||
Cash flows provided from financing activities
|
100,896 | 17,354,954 | 5,682,168 | |||||||||
|
||||||||||||
Investing activity
|
||||||||||||
Purchase of property and equipment
|
(14,474 | ) | (101,178 | ) | (1,823,746 | ) | ||||||
Cash flows used in investing activities
|
(14,474 | ) | (101,178 | ) | (1,823,746 | ) | ||||||
|
||||||||||||
|
||||||||||||
(Decrease) Increase in cash
|
(6,577,255 | ) | 4,744,816 | (2,247,363 | ) | |||||||
Cash, beginning of year
|
6,641,877 | 1,897,061 | 4,144,424 | |||||||||
Cash, end of year
|
64,622 | 6,641,877 | 1,897,061 | |||||||||
|
||||||||||||
Supplemental cash flow information
|
||||||||||||
Interest paid
|
139,787 | 209,675 | 123,204 | |||||||||
Taxes paid
|
– | – | – | |||||||||
CONTACT INFORMATION:
Intellipharmaceutics International Inc.
Isa Odidi
Chief executive Officer
416.798.3001 ext. 102
investors@intellipharmaceutics.com
SOURCE: Intellipharmaceutics International Inc.
View source version on accesswire.com:
https://www.accesswire.com/578403/Intellipharmaceutics-Announces-Fiscal-Year-2019-Results
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