TORONTO, Feb. 23, 2015 (GLOBE NEWSWIRE) -- Intellipharmaceutics International Inc. (Nasdaq:IPCI) (TSX:I) (“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, 2014. All dollar amounts referenced herein are in United States dollars unless otherwise noted.
Dr. Isa Odidi, Chairman and CEO, stated, “2014 was a pivotal year for Intellipharmaceutics. It represents the first full year of sales under our commercialization agreement with Par for dexmethylphenidate hydrochloride extended-release capsules. We are also excited about the progress we continue to make in the development of our Rexista™ abuse-deterrent delivery technologies including a variant under development which holds promise in mitigating against the likelihood of opioid overdose. The Company is now expanding the use of its complex generic drug delivery capabilities by increased focus on innovative applications in the specialty new-drug space.”
Domenic Della Penna, Chief Financial Officer, stated, “In 2014 we reduced our operating losses by 48%, and while we are not cash flow positive, we are moving towards commercial readiness should any pending generic drug applications be approved in the near term. The recent achievement of an ‘acceptable’ rating from the FDA for our Toronto manufacturing facility is an important part of that readiness.”
Full Year Financial Results
Revenue related to the Company’s license and commercialization agreement with Par Pharmaceutical, Inc. (“Par”) in the year ended November 30, 2014 was $8.8 million versus $1.5 million in the prior year. The $8.8 million revenue in the year ended November 30, 2014 reflects a full year of commercial sales of the 15 and 30 mg strengths of the Company’s dexmethylphenidate hydrochloride extended-release generic of Focalin XR® capsules, while the $1.5 million revenue in the year ended November 30, 2013 was derived principally from 12 days of commercial sales of 15 and 30 mg strengths of dexmethylphenidate hydrochloride extended-release generic of Focalin XR® capsules. In November 2013, we received a conditional approval from the U.S Food and Drug Administration (“FDA”) to launch our generic Focalin XR® 5 mg capsules. It is understood by the Company that the conditional approval could be made final upon the expiry of six months from the date of marketplace launch in the United States by the Company first to file for approval of the 5 mg strength with the FDA. We believe that Teva Pharmaceuticals USA, Inc. (“Teva”) is the Company with that first-to-file exclusivity status. Should we receive final approval to launch the 5mg strength of our generic Focalin XR ® capsules six months after the date of launch of the 5 mg strength by Teva, we believe that Par, our manufacturing, marketing and distribution partner for our generic Focalin XR ® products intends to launch this strength immediately upon the expiry of the exclusivity period in May 2015, but there can be no assurance as to when or if any launch will occur.
Loss from operations for the year ended November 30, 2014 was $3.5 million compared with loss from operations of $6.8 million for the year ended November 30, 2013, or a 48% reduction. Research and development (“R&D”) expenditures in the year ended November 30, 2014 increased to $8.0 million versus $5.1 million for the prior year, or a 57% increase, due to an overall increase in R&D expense over the prior year, including stock-based compensation for R&D employees. After adjusting for stock-based compensation, expenditures for R&D were 59% higher than in the prior year. Selling, general and administrative expenses in the year ended November 30, 2014 increased to $3.9 million versus $2.9 million in the prior year. After adjusting for stock-based compensation expense, expenditures for selling, general and administrative expenses were slightly higher due to an increase in the number of management and non-management employees.
The Company recorded a net loss for the year ended November 30, 2014 of $3.9 million, or $0.17 per common share, compared with a loss of $11.5 million, or $0.58 per common share for the year ended November 30, 2013. The decreased loss can be attributed to an increase in revenue recognized from the payments received from the commercial sales of dexmethylphenidate hydrochloride extended-release generic of Focalin XR® capsules in the year ended November 30, 2014 compared to the prior year. In addition, there was no adjustment to the fair value adjustment of derivative liabilities compared to a loss in the fair value adjustment of derivative liabilities in the prior year. The fair value adjustment of derivative liabilities in the year ended November 30, 2014 was $Nil versus a loss of $3.9 million in the prior year. Stock-based compensation expense in the year ended November 30, 2014 was $1.7 million versus $1.2 million in the prior year.
At November 30, 2014, Intellipharmaceutics’ cash and cash equivalents totaled $4.2 million, compared with $0.8 million at November 30, 2013. The increase in cash during the year ended November 30, 2014 is mainly a result of the decrease in cash flows used in operating activities due to payments received from the commercial sales of our generic Focalin XR ® (dexmethylphenidate hydrochloride extended-release) capsules for the 15 and 30 mg strengths; the cash flows from financing activities which are mainly from our at-the-market financing together with several warrant exercises partially offset by purchases of production, laboratory and computer equipment.
For the year ended November 30, 2014, net cash flows used in operating activities decreased to $1.7 million as compared to $6.9 million for the year ended November 30, 2013. The decrease was due to the payments received from the commercial sales of generic Focalin XR ® (dexmethylphenidate hydrochloride extended-release) capsules by Par for the 15 and 30 mg strengths, partially offset by the increase in R&D expenses and increase in selling, general and admin. For the year ended November 30, 2014, net cash flows provided from financing activities were $6.0 million compared to $7.3 million in the year ended November 30, 2013. In the year ended November 30, 2014 financing was principally from our at-the-market issuances of 1,689,500 common shares sold on NASDAQ for gross proceeds of $6.6 million with net proceeds to us of $6.4 million. For the year ended November 30, 2014 net cash flows used in investing activities was $0.7 million compared to $0.1 million in the year ended November 30, 2013. This increase was mainly the result of purchases of production, laboratory and computer equipment during the year due to the acceleration of product development activities.
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