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Intellipharmaceutics Announces First Quarter 2013 Results



Intellipharmaceutics Announces First Quarter 2013 Results

TORONTO, April 3, 2013 (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 months ended February 28, 2013. All dollar amounts
referenced herein are in United States dollars unless otherwise noted.

The Company recorded a loss for the three months ended February 28, 2013 of
$1.3 million, or $0.07 per common share, compared with a loss of $1.9 million,
or $0.12 per common share, for the three months ended February 29, 2012. The
Company's decreased net loss in the first quarter ended February 28, 2013, can
be attributed to lower overall expenses in research and development and
selling, general and administrative expenses, and a larger fair value
adjustment of derivative liabilities compared to the prior period.

Loss from operations for the three months ended February 28, 2013 was $2.3
million compared with $3.1 million for the three months ended February 29,
2012. Research and development expense for the three months ended February 28,
2013 decreased to $1.3 million compared to $2.0 million in the three months
ended February 29, 2012. After adjusting for stock-based compensation expense,
expenditures for research and development for the three months ended February
28, 2013 were higher by $0.3 million. Selling, general and administrative
expenses for the three months ended February 28, 2013 decreased to $0.8
million versus $1.1 million in the prior period. After adjusting for
stock-based compensation expense, expenditures for selling, general and
administrative expenses for the three months ended February 28, 2013 were
higher by $0.1 million.

At February 28, 2013, Intellipharmaceutics' cash and cash equivalents totaled
$0.5 million, compared with $0.5 million at November 30, 2012. Cash during the
three months ended February 28, 2013 remained effectively the same as a result
of cash used in operating activities offset by cash provided from financing
activities related to the Company's January 10, 2013 private placement
financing of an unsecured convertible debenture (the "debenture") in the
principal amount of $1.5 million, described more fully below.

For the three months ended February 28, 2013, net cash flows used in operating
activities decreased to $1.4 million, as compared to net cash flows used in
operating activities for the three months ended February 29, 2012 of $2.2
million. This decrease is a result of the implementation of active cash
management resulting in accounts payable and accrued liabilities increasing
during the three months ended February 28, 2013. For the three months ended
February 28, 2013, net cash flows from financing activities of $1.5 million
related mainly to the debenture financing.

Corporate Update

  o On January 10, 2013, Intellipharmaceutics announced the closing of its
    $1.5 million debenture financing. The debenture, which will mature January
    1, 2015, 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 US$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 and
    who directly and through their family holding company are its largest
    shareholders, provided the Company with the $1.5 million of the proceeds
    for the debenture. The debenture financing was non-brokered and the net
    proceeds are being used for working capital and general corporate
    purposes.
     
  o In March 2013, Intellipharmaceutics announced an update on its generic
    versions of the marketed drugs Keppra XR® and Pristiq®. The FDA has
    accepted for filing the Company's ANDA for generic Keppra XR®. Based on
    the FDA's preliminary review and comments on the Company's ANDA for
    generic Pristiq®, the Company plans to repeat one of three bioequivalence
    studies for the product candidate. The Company will amend its existing
    application for generic Pristiq® to include the new study upon its
    successful completion.
     
  o In late March 2013, Intellipharmaceutics announced the closing of a
    registered direct unit offering for gross proceeds of approximately $3.1
    million at a price of $1.72 per unit. The Company sold units comprised of
    an aggregate of 1,815,000 common shares and warrants to purchase an
    additional 453,750 common shares. The warrants are exercisable
    immediately, have a term of five years and an exercise price of $2.10 per
    common share. After placement agent fees and estimated offering expenses,
    the Company received net proceeds from the offering of approximately $2.7
    million. Intellipharmaceutics intends to use the net proceeds to file
    additional Abbreviated New Drug Applications (ANDAs) with the Food and
    Drug Administration, to advance clinical trials for its abuse resistant
    Rexista™ technology and/or other New Drug Application (NDA) 505(b)(2)
    opportunities, to establish additional partnerships, and for working
    capital, research, product development and general corporate purposes.
     
  o In early April 2013, Intellipharmaceutics settled the litigation related
    to the 40 mg strength of its generic version of Focalin XR®. Novartis
    Pharmaceuticals Corporation, Novartis Pharma AG and Celgene Corporation
    have settled their patent suit in the U.S. District Court for the District
    of New Jersey, and Alkermes Pharma Ireland Limited has settled its patent
    suit in the U.S. District Court for the District of Delaware, with
    Intellipharmaceutics Corp., a wholly-owned subsidiary of the Company and
    with its licensee Par Pharmaceutical, Inc. ("Par") in relation to the 40
    mg strength of a generic version of the attention deficit hyperactivity
    disorder ("ADHD") drug Focalin XR®. The terms of the settlements are
    confidential and remain subject to regulatory and court approval. These
    settlements are in addition to earlier announced settlements concerning
    the 5, 10, 15, 20 and 30 mg strengths of generic versions of Focalin XR®.

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 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 filings 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 prospectus supplement related to the offering,
and 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 condensed unaudited interim consolidated financial statements,
accompanying notes to the condensed unaudited interim consolidated financial
statements, and Management Discussion and Analysis for the three months ended
February 28, 2013, 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)
                                               February 28,  November 30,
                                               2013          2012
                                                $             $ 
                                                              
Assets                                                        
Current                                                       
Cash and cash equivalents                       515,840       497,016
Accounts receivable                             10,965        2,778
Investment tax credits                          387,993       301,932
Prepaid expenses, sundry and other assets       156,150       137,449
                                                1,070,948     939,175
                                                              
                                                              
Property and equipment, net                     1,479,692     1,535,703
                                                2,550,640     2,474,878
                                                              
Liabilities                                                   
Current                                                       
Accounts payable                                1,097,241     512,360
Accrued liabilities                             288,707       224,797
Employee costs payable                          681,447       663,222
Current portion of capital lease obligations    51,474        51,524
Due to related parties                          765,806       783,717
                                                2,884,675     2,235,620
                                                              
Convertible debenture                           1,369,941     --
Capital lease obligations                       30,969        46,242
Warrant liability                               918,124       1,960,893
                                                5,203,709     4,242,755
                                                              
Shareholders' deficiency                                      
Capital stock                                                 
Authorized                                                    
Unlimited common shares without par value                     
Unlimited preference shares                                   
Issued and outstanding                                        
17,906,937 common shares                        147,152       147,152
(2012 - 17,906,937)                                           
Additional paid-in capital                      28,622,352    28,409,665
Accumulated other comprehensive income (loss)   2,244         (240,010)
Accumulated deficit                             (31,424,817)  (30,084,684)
                                                (2,653,069)   (1,767,877)
Contingencies                                                 
                                                2,550,640     2,474,878
                                                              

Intellipharmaceutics International Inc.
Condensed unaudited interim consolidated statements of operations 
and comprehensive loss
for the three months ended February 28, 2013 and February 29, 2012
(Stated in U.S. dollars)
                                                2013         2012
                                                 $            $ 
                                                              
Revenue                                                       
Research and development                         --           107,091
                                                 --           107,091
                                                              
Expenses                                                      
Research and development                         1,337,755    2,003,427
Selling, general and administrative              833,457      1,149,756
Depreciation                                     93,073       61,370
                                                 2,264,285    3,214,553
                                                              
Loss from operations                             (2,264,285)  (3,107,462)
Fair value adjustment of derivative liabilities  1,232,157    968,181
Net foreign exchange (loss) gain                 (242,617)    210,607
Interest income                                  10           8,630
Interest expense                                 (65,398)     (16,475)
Loss                                             (1,340,133)  (1,936,519)
Other comprehensive income (loss)                             
Foreign exchange translation adjustment          242,254      (194,932)
Comprehensive loss                               (1,097,879)  (2,131,451)
                                                              
Loss per common share, basic and diluted         (0.07)       (0.12)
                                                              
Weighted average number of common                             
shares outstanding, basic and diluted            17,906,937   15,929,323
                                                              

Intellipharmaceutics International Inc.
Condensed unaudited interim consolidated statements of cash flows
for the three months ended February 28, 2013 and February 29, 2012
(Stated in U.S. dollars) 
                                                     2013         2012
                                                      $            $ 
                                                                   
Loss                                                  (1,340,133)  (1,936,519)
Items not affecting cash                                           
Depreciation                                          93,073       61,370
Stock-based compensation                              202,874      1,589,843
Deferred share units                                  9,813        6,569
Accrued interest on related party loan                24,610       11,301
Fair value adjustment of derivative liabilities       (1,232,157)  (968,181)
Unrealized foreign exchange loss (gain)               258,815      (197,421)
Change in non-cash operating assets & liabilities                  
Accounts receivable                                   (8,187)      (10,482)
Investment tax credits                                (99,856)     (97,289)
Prepaid expenses and sundry assets                    (23,513)     (66,776)
Accounts payable and accrued liabilities              696,128      (482,723)
Deferred revenue                                      --           (107,091)
Cash flows used in operating activities               (1,418,533)  (2,197,399)
                                                                   
Financing activities                                               
Payments to related parties                           (10,349)     --
Repayment of capital lease obligations                (12,070)     (10,585)
Proceeds from convertible debenture                   1,500,000    --
Proceeds from issuance of shares on exercise of       --           62,500
warrants 
Cash flows provided from financing activities         1,477,581    51,915
                                                                   
Investing activity                                                 
Purchase of property and equipment                    (37,064)     (52,755)
                                                                   
Cash flows used in investing activities               (37,064)     (52,755)
                                                                   
Effect of foreign exchange (loss) gain on                          
cash held in foreign currency                         (3,160)      13,688
                                                                   
Increase (decrease) in cash and cash equivalents      18,824       (2,184,551)
Cash and cash equivalents, beginning of period        497,016      4,817,088
                                                                   
Cash and cash equivalents, end of period              515,840      2,632,537
                                                                   
Interest paid                                         10,349       --
Taxes paid                                            --           --
                                                                   

CONTACT: 30 Worcester Road
         Toronto, ON Canada M9W 5X2
         www.intellipharmaceutics.com
        
         Shameze Rampertab
         Vice President Finance & CFO
         416-798-3001 x106
         investors@intellipharmaceutics.com

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