Intellipharmaceutics Announces Second Quarter 2013 Results

Intellipharmaceutics Announces Second Quarter 2013 Results

TORONTO, July 2, 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 and six months ended May 31, 2013. All dollar amounts
referenced herein are in United States dollars unless otherwise noted.

The Company recorded a net loss for the three months ended May 31, 2013 of
$1.8 million, or $0.09 per common share, compared with a net loss of $1.4
million, or $0.08 per common share, for the three months ended May 31, 2012.
The net loss for the six months ended May 31, 2013 was $3.1 million, or $0.17
per common share, compared with a net loss of $3.3 million, or $0.20 per
common share, for the six months ended May 31, 2012. The Company's increased
net loss in the three months ended May 31, 2013, can be primarily attributed
to a reduction in the fair value adjustment of derivative liability of $0.2
million compared to $0.8 million in the comparable 2012 period, and the timing
of certain research and development activities. After adjusting for the fair
value adjustment of derivative liability the loss for the three months ended
May 31, 2013 was lower by $0.2 million and is discussed below.

Loss from operations for the three months ended May 31, 2013 was $1.8 million
compared with $2.0 million for the three months ended May 31, 2012. Research
and development expense for the three months ended May 31, 2013 decreased to
$0.9 million compared to $1.1 million in the three months ended May 31, 2012.
After adjusting for stock-based compensation expense, expenditures for
research and development for the three months ended May 31, 2013 were lower by
$0.2 million. Selling, general and administrative expenses for the three
months ended May 31, 2013 were $0.8 million versus $0.8 million in the prior
period. After adjusting for stock-based compensation expense, expenditures for
selling, general and administrative expenses for the three months ended May
31, 2013 were lower by $0.1 million.

At May 31, 2013, Intellipharmaceutics' cash and cash equivalents totaled $1.6
million, compared with $0.5 million at November 30, 2012. The increase in cash
during the three months ended May 31, 2103 is mainly due to the Company's
registered direct unit offering for gross proceeds of $3.1 million completed
in March 2013.

For the three months ended May 31, 2013, net cash flows used in operating
activities were $1.8 million, and were not significantly different as compared
to net cash flows used in operating activities for the three months ended May
31, 2012 of $1.8 million. For the three months ended March 31, 2013, net cash
flows from financing activities of $2.9 million related to the Company's March
2013 registered direct unit offering, discussed below.

Quarterly Corporate Highlights

  oIn March 2013, Intellipharmaceutics announced an update on its generic
    versions of the marketed drugs Keppra XR® and Pristiq®. The United States
    Food and Drug Administration ("FDA") has accepted for filing the Company's
    Abbreviated New Drug Application ("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.
    
  oIn 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 for 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 ANDAs with the FDA, 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.
    
  oIn 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. in relation to the 40 mg
    strength of a generic version of the attention deficit hyperactivity
    disorder drug Focalin XR®. In April, 2013, the parties stipulated to a
    full and final dismissal of the pending patent litigation in the states of
    New Jersey and Delaware, and the cases were dismissed on May 21, 2013. The
    terms of the settlements are confidential. 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 latest annual information form, our latest Form
20-F, as amended, and our latest Form F-3 (including any documents forming a
part thereof or incorporated by reference therein), 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 and six
months ended May 31, 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)
                                              May 31,       November30,
                                              2013          2012
                                              $           $
                                                           
Assets                                                      
Current                                                    
Cash and cash equivalents                     1,576,704    497,016
Accounts receivable                            2,662        2,778
Investment tax credits                         449,961      301,932
Prepaid expenses, sundry and other assets      136,978      137,449
                                              2,166,305    939,175
                                                           
                                                           
Property and equipment, net                   1,441,565    1,535,703
                                              3,607,870    2,474,878
                                                           
Liabilities                                                
Current                                                    
Accounts payable                              934,393      512,360
Accrued liabilities                            372,517      224,797
Employee costs payable                        706,656      663,222
Current portion of capital lease obligations   53,103       51,524
Due to related parties                        755,845      783,717
                                              2,822,514    2,235,620
                                                           
Convertible debenture                         1,360,756    --
Capital lease obligations                     16,799       46,242
Warrant liability                             1,183,516    1,960,893
                                              5,383,585    4,242,755
                                                           
Shareholders' deficiency                                    
Capital stock                                              
Authorized                                                  
Unlimited common shares without par value                   
Unlimited preference shares                                 
Issued and outstanding                                      
19,721,936 common shares                      147,152      147,152
(2012 - 17,906,937)                                         
Additional paid-in capital                     31,249,525   28,409,665
Accumulated other comprehensive income (loss) 34,086       (240,010)
Accumulated deficit                            (33,206,478) (30,084,684)
                                              (1,775,715)  (1,767,877)
Contingencies                                               
                                              3,607,870    2,474,878



Intellipharmaceutics International Inc.
Condensed unaudited interim consolidated statements of operations and
comprehensive loss
                                                             
(Stated in U.S. dollars)
                      Three months ended         Six months ended
                      May 31, 2013 May 31, 2012 May 31, 2013 May 31, 2012
                      $           $           $           $
                                                             
Revenue                                                       
Research and           --           --           --           107,091
development
                      --           --           --           107,091
                                                             
Expenses                                                      
Research and           934,068      1,098,421    2,271,822    3,101,848
development
Selling, general and   752,431      823,054      1,585,888    1,972,810
administrative
Depreciation           100,013      76,065       193,086      137,435
                      1,786,512    1,997,540    4,050,796    5,212,093
                                                             
Loss from operations   (1,786,512)  (1,997,540)  (4,050,796)  (5,105,002)
Fair value adjustment
of derivative          174,917      846,467      1,407,074    1,814,648
liabilities
Financing expense     (56,826)     --           (56,826)     --
Net foreign exchange   (26,539)     (199,792)    (269,156)    10,815
(loss) gain
Interest income        78           8,913        88           17,542
Interest expense       (86,780)     (15,891)     (152,178)    (32,366)
Loss                   (1,781,662)  (1,357,843)  (3,121,794)  (3,294,363)
Other comprehensive                                           
income (loss)
Foreign exchange       31,842       77,728       274,096      (117,204)
translation adjustment
Comprehensive loss     (1,749,820)  (1,280,115)  (2,847,698)  (3,411,567)
                                                             
Loss per common share, (0.09)       (0.08)       (0.17)       (0.20)
basic and diluted
                                                             
Weighted average                                              
number of common
shares outstanding,    19,287,915   17,455,183   18,605,014    16,696,422
basic and diluted



Intellipharmaceutics International Inc.
Condensed unaudited interim consolidated statements of cash flows
                                                            
(Stated in U.S. dollars)
                  Three months ended            Six months ended
                  May 31, 2013 May 31, 2012 May 31, 2013 May 31, 2012
                  $            $            $            $
                                                            
Net loss          (1,781,662)   (1,357,843)   (3,121,794)   (3,294,363)
Items not                                                    
affecting cash
Depreciation       100,013       76,065        193,086       137,435
Stock-based        281,978       238,134       484,851       1,827,977
compensation
Deferred shared    9,404         9,439         19,216        16,008
units
Interest accrual  11,072        11,110        21,883        22,411
Fair value
adjustment of      (174,917)     (846,467)     (1,407,074)   (1,814,648)
derivative
liabilities
Unrealized foreign 110,059       207,012       372,327       9,591
exchange loss
                                                            
Change in non-cash
operating assets &                                           
liabilities
Accounts           8,303         11,459        116           977
receivable
Investment tax     (65,129)      (65,946)      (164,986)     (163,235)
credits
Prepaid expenses,
sundry assets and  16,959        (77,911)      (6,554)       (144,687)
other assets
Accounts payable
and accrued        (271,002)     (38,717)      425,126       (521,440)
liabilities
Deferred revenue   --            --            --            (107,091)
Cash flows used in
operating          (1,754,922)   (1,833,665)   (3,183,803)   (4,031,065)
activities
                                                            
Financing                                                    
activities
Repayment of
capital lease      (12,368)      (10,637)      (24,439)      (21,222)
obligations
Proceeds from
convertible        --            --            1,500,000     --
debenture
Proceeds from
issuance of shares --            --            --            62,500
on exercise of
warrants
Proceeds from
issuance of shares 3,121,800     5,000,000     3,121,800     5,000,000
and warrants
Share issuance     (222,308)     (510,421)     (222,308)     (510,421)
cost
Cash flows from
financing          2,887,124     4,478,942     4,375,053     4,530,857
activities
                                                            
Investing activity                                           
Purchase of
property and       (64,123)      (323,823)     (101,187)     (376,577)
equipment
Cash flows used in
investing          (64,123)      (323,823)     (101,187)     (376,577)
activities
                                                            
Effect of foreign                                            
exchange loss on
cash held in       (7,215)       (19,046)      (10,375)      (5,358)
foreign currency
                                                            
Increase in cash   1,060,864     2,302,408     1,079,688     117,857
Cash and cash
equivalents,       515,840       2,632,537     497,016       4,817,088
beginning of
period
                                                            
Cash and cash
equivalents, end   1,576,704     4,934,945     1,576,704     4,934,945
of period
                                                            
Supplemental cash                                            
flow information
Interest paid      62,383        --            86,531        113,940
Taxes paid         --            --            --            --

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

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