TORONTO, April 11, 2017 (GLOBE NEWSWIRE) -- Intellipharmaceutics International Inc. (NASDAQ:IPCI) (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 three months ended February 28, 2017. All dollar amounts referenced herein are in United States dollars unless otherwise noted.
First Quarter Key Highlights
- Revenues double to $1.2 million from $0.6 million (launch of 2 new generic Focalin XR® strengths)
- FDA accepts filing of Rexista™ NDA, grants PDUFA date of September 25, 2017
- Patents covering aspects of overdose prevention technology, PODRAS™, issued by U.S. and Canadian patent offices
- Continued progress made towards May 2017 anticipated launch of generic Seroquel XR®
“We are pleased with the revenue improvement resulting from the launch of the additional generic Focalin XR® strengths, given they reflect only 7 weeks of sales. We look forward to Par launching the remaining four strengths in the first half of 2017. While 2017 is off to a great start, we expect revenues will continue to strengthen as we make progress towards the anticipated launch of our generic Seroquel XR® tablets by Mallinckrodt in May 2017,” stated Dr. Isa Odidi, Chairman and CEO. “More importantly, our priorities over the next few months will be increasingly focused on working with the FDA towards advancing our Rexista™ NDA candidate.”
Corporate Developments
In February 2017, we received final approval from the U.S. Food and Drug Administration (“FDA”) for our Abbreviated New Drug Application (“ANDA”) for metformin hydrochloride extended release tablets in the 500 and 750 mg strengths. Our newly-approved product is a generic equivalent for the corresponding strengths of the branded product Glucophage® XR sold in the U.S. by Bristol-Myers Squibb. We are actively evaluating options to realize commercial returns from this new approval.
In February 2017, the FDA accepted for filing our New Drug Application (“NDA”) filed in November 2016, seeking authorization to market our Rexista™ product candidate (abuse-deterrent oxycodone hydrochloride extended release tablets) in the 10, 15, 20, 30, 40, 60 and 80 mg strengths. The FDA determined that our application is sufficiently complete to permit a substantive review, and has set a target action date under the Prescription Drug User Fee Act (“PDUFA”) of September 25, 2017. The submission is supported by pivotal pharmacokinetic studies that demonstrated that RexistaTM is bioequivalent to OxyContin® (oxycodone hydrochloride extended release). The submission also includes abuse-deterrent studies conducted to support abuse-deterrent label claims related to abuse of the drug by various pathways, including oral, intra-nasal and intravenous.
In January 2017, our U.S. marketing partner, Par Pharmaceutical Inc. (“Par”), launched the 25 and 35 mg strengths of its generic Focalin XR® (dexmethylphenidate hydrochloride extended-release) capsules in the U.S., complementing the 15 and 30 mg strengths of our generic Focalin XR® currently marketed by Par. The FDA had recently granted final approval to Par’s ANDA for its generic Focalin XR® capsules in the 5, 10, 15, 20, 25, 30, 35 and 40 mg strengths. We expect sales of the 25 and 35 mg strengths to significantly improve our revenues in 2017. As the first filer of an ANDA for generic Focalin XR® in the 25 and 35 mg strengths, Par has 180 days of U.S. generic marketing exclusivity for these strengths. We believe Par is preparing to launch all the remaining strengths in the first half of 2017.
- In December 2016, U.S. Patent No. 9,522,119 and Canadian Patent No. 2,910,865 were issued by the U.S. Patent and Trademark Office and the Canadian Intellectual Property Office in respect of “Compositions and Methods for Reducing Overdose”. The issued patents cover aspects of our Paradoxical OverDose Resistance Activating System (“PODRAS™”) delivery technology, which is designed to prevent overdose when more pills than prescribed are swallowed intact. Preclinical studies of prototypes of oxycodone with PODRAS™ technology suggest that, unlike other third-party abuse-deterrent oxycodone products in the marketplace, if more tablets than prescribed are deliberately or inadvertently swallowed, the amount of drug active released over 24 hours may be substantially less than expected. However, if the prescribed number of pills is swallowed, the drug release should be as expected. The issuance of these patents provides us with the opportunity to accelerate our PODRAS™ development plan in 2017 by pursuing proof of concept studies in humans. We intend to incorporate this technology in an alternate Rexista™ product candidate.
We cannot provide any assurance that any target launch date will be met for the remaining strengths of Par’s generic Focalin XR® or for our generic Seroquel XR®. Also, there can be no assurance that we will not be required to conduct further studies for RexistaTM, that the FDA will ultimately approve the NDA for the sale of RexistaTM in the U.S. market, or that it will ever be successfully commercialized, that our approved generic versions of Keppra XR® or Glucophage XR® will be successfully commercialized, 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, or that they will ever be successfully commercialized and produce significant revenue for us.
Recently Commenced Litigation
In connection with our NDA filed in November 2016 for our RexistaTM product candidate (abuse-deterrent oxycodone hydrochloride extended release tablets), we relied on the 505(b)(2) regulatory pathway and referenced data from Purdue Pharma L.P.'s file for its OxyContin® extended release oxycodone hydrochloride. Our RexistaTM application was accepted by the FDA for further review in February 2017. We certified to the FDA that we believed that our RexistaTM product candidate would not infringe any of sixteen (16) patents associated with the branded product Oxycontin® (the “Oxycontin® patents”) listed in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, commonly known as the Orange Book (the “Orange Book”), or that such patents are invalid, and so notified Purdue Pharma L.P. and the other owners of the subject patents listed in the Orange Book of such certification. On April 7, 2017, we received notice that Purdue Pharma L.P., Purdue Pharmaceuticals L.P., The P.F. Laboratories, Inc., Rhodes Technologies, and Grünenthal GmbH (collectively, “Purdue litigation plaintiffs”) had commenced patent infringement proceedings against us in the U.S. District Court for the District of Delaware in respect of our NDA filing for Rexista™, alleging that Rexista™ infringes six (6) out of the sixteen (16) patents. The complaint seeks injunctive relief as well as attorneys’ fees and costs and such other and further relief as the Court may deem just and proper.
As a result of the commencement of these legal proceedings, the FDA is stayed for 30 months from granting final approval to our RexistaTM product candidate. That time period commenced on February 24, 2017, when the Purdue litigation plaintiffs were notified of our certification concerning the patents, and will expire on August 24, 2019, unless the stay is earlier terminated by a final declaration of the courts that the patents are invalid, or are not infringed, or the matter is otherwise settled among the parties. We are confident that we do not infringe the subject patents, and will vigorously defend against these claims.
2017 First Quarter Financial Results
The Company recorded revenues of $1.2 million for the three months ended February 28, 2017 versus $0.6 million for the three months ended February 29, 2016. For the three months ended February 28, 2017, we recognized licensing revenue of $1.2 million from commercial sales of 15, 25, 30 and 35 mg strengths of generic Focalin XR® capsules under the Par agreement. The increase in revenues is due to Par’s January 2017 launch of the 25 and 35 mg strengths of generic Focalin XR® capsules in the U.S. Based on the most recent information available to us, our overall market share on the combined 15 and 30 mg strengths of generic Focalin XR® capsules is approximately 34%. It is too soon for us to estimate our market share for the recently launched 25 and 35 mg strengths. Revenue under the Par agreement represents the commercial sales of the generic product in those strengths and may not be representative of future sales. In addition, in the fourth quarter of 2016, the Company received a non-refundable up-front payment of $3,000,000 from Mallinckrodt LLC (“Mallinckrodt”) pursuant to the Mallinckrodt agreement, of which $75,000 was recognized as revenue during the three months ended February 28, 2017. Such up-front fees are recognized over the expected 10 year term of the contract. There were no up-front fees recognized in the three months ended February 29, 2016.
The Company recorded net loss for the three months ended February 28, 2017 of $2.0 million, or $0.07 per common share, compared with a net loss of $2.1 million, or $0.09 per common share, for the three months ended February 29, 2016. The lower net loss is primarily attributed to higher licensing revenues from commercial sales of generic Focalin XR®, as discussed above, in the first quarter of 2017 partially offset by an increase in performance-based options expense and legal and other professional fees. For the three months ended February 29, 2016, the net loss was attributed to lower licensing revenues and an increase in performance-based options expense compared to the prior period. Stock option expense is a non-cash item.
Research and development (“R&D”) expenditures for the three months ended February 28, 2017 were $2.0 million in comparison to $1.8 million in the three months ended February 29, 2016. The increase is primarily due to higher stock option compensation expense as a result of certain performance-based stock options vesting upon FDA approval of our generic Glucophage XR® tablets. After adjusting for the stock-based compensation expenses, expenditures for R&D for the three months ended February 28, 2017 were higher by $53,245 compared to the three months ended February 29, 2016. This is primarily due to higher compensation expense.
Selling, general and administrative expenses were $1.0 million for the three months ended February 28, 2017 in comparison to $0.8 million for the three months ended February 29, 2016, an increase of $0.2 million. The increase is due to higher corporate legal activities and other professional fees, as well as higher compensation expenses.
The Company had cash of $2.4 million as at February 28, 2017 compared to $4.1 million as at November 30, 2016. The decrease in cash during the three months ended February 28, 2017 was mainly a result of our ongoing expenditures in R&D and selling, general, and administrative expenses, and an increase in purchases of production equipment to support our anticipated generic Seroquel XR® launch, which were only partially offset by cash receipts from commercialized sales of our generic Focalin XR® and cash receipts provided from financing activities derived from common share sales under the Company’s at-the-market offering program.
As of April 11, 2017, our cash balance was $1.7 million. We currently expect to satisfy our operating cash requirements until July 2017 from cash on hand and higher quarterly profit share payments from Par. Should the Company secure final FDA approval on its generic Seroquel XR® ANDA and, in collaboration with its marketing and distribution partner Mallinckrodt, successfully launch all or some of the strengths in May 2017, then the Company may be cash flow positive in the third quarter of 2017. Failing this, the Company may need to obtain additional funding prior to that time as we further the development of our product candidates and if we accelerate our product commercialization activities. There can be no assurance as to when or if Par will launch the additional strengths of its generic Focalin XR® and, if launched, whether they will be successfully commercialized, or if generic Seroquel XR® will be approved or successfully commercialized. If necessary, we expect to utilize our at-the-market offering program to bridge any funding shortfall in the second quarter of 2017.
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.
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