Intellipharmaceutics: Intellipharmaceutics Announces Third Quarter 2023 Results

TORONTO, ON / ACCESSWIRE / October 16, 2023 / Intellipharmaceutics International Inc. (OTCQB:IPCIF)(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 and nine months ended August 31, 2023. All dollar amounts referenced herein are in United States dollars unless otherwise noted. We reported that the five nominees, each of whom was an incumbent director of the Company, identified in the Management Information Circular dated August 1, 2023 (the "Circular") were elected as directors of the Company at the annual meeting of shareholders of the Company held September 14, 2023. Other resolutions tabled for consideration at the Meeting, as set out in the Circular, were also approved by shareholders of the Company. On June 5, 2023 the Company filed its annual audited financial statements for the year ended November 30, 2022 as well as the interim (Q1 2023) financial statements, MD&A and the required certifications. The Ontario Securities Commission (the "OSC") was satisfied that the Company had filed the continuous disclosure documents required within the time specified in the failure to file cease trade order (CTO), then in effect, and revoked the CTO June 7, 2023. On March 7, 2023 the Company had announced that the "OSC" had issued a general "failure to file" cease trade order (CTO) pursuant to National Policy 11-103 - Failure to File Cease Trade Orders in Multiple Jurisdictions dated March 6, 2023 in respect of the securities of the Company as a result of the Company's inability to file its annual audited financial statements and other required filings for the fiscal year ended November 30, 2022 by the filing deadline of February 28, 2023. The CTO prohibited the trading, whether direct or indirect, by any person of any securities of the Company in each jurisdiction in Canada in which the Company is a reporting issuer for as long as the CTO remains in effect; however, the CTO provides an exception for beneficial security holders of the Company who are not (and who were not as of March 6, 2023) insiders or control persons of the Company and who sell securities of the Company acquired before March 6, 2023 if both of the following criteria are met: (i) the sale is made through a "foreign organized regulated market", as defined in section 1.1 of the Universal Market Integrity Rules of the Investment Industry Regulatory Organization of Canada and (ii) the sale is made through an investment dealer registered in a jurisdiction of Canada in accordance with applicable securities legislation. If the default is remedied within 90 days of the date of the CTO (March 6, 2023), including any annual or interim financial statements, MD&A and certifications that subsequently became due, the filing of the documents constitutes the application to revoke the CTO and no application fee would be required. On February 3, 2023 the Company had announced that its annual audited financial statements for the fiscal year ended November 30, 2022, related management's discussion and analysis and accompanying Chief Executive Officer and Chief Financial Officer certificates and annual information form for the fiscal year ended November 30, 2022 due February 28, 2023 will not be filed by the filing deadline. In August 2022 the Company announced that it has entered into a license and supply agreement with Taro Pharmaceuticals Inc. ("Taro"), by which the Company has granted Taro an exclusive license to market, sell and distribute in Canada, Desvenlafaxine Extended-release Tablets in the 50 mg and 100 mg strengths (the "licensed product") approved for sale in the Canadian market by the Pharmaceutical Drugs Directory (PDD) of Health Canada. In February 2022 the Company received marketing approval for the Canadian market from Health Canada (notice of compliance) for generic Pristiq (desvenlafaxine succinate extended-release tablets) in the 50 and 100 mg strengths. Results of Operations The Company recorded net loss for the three months ended August 31, 2023 of $1,889,227 or $0.06 per common share, compared with a net loss of $296,043 or $0.01 per common share for the three months ended August 31, 2022. For the three months ended August 31, 2023, the net loss is attributed to expenditures related to ongoing selling, general and administrative expenses related to professional and legal fees, as well as ongoing R&D expenses, as well as recording of $873,713 as a provision for potential clawback of royalty revenue from future sales of our generic Focalin XR® under the Par agreement; it is connected with licensing revenue of the product during the three-months ended August 31, 2023. In the three months ended August 31, 2022, the net loss was attributed to the gain on sale of equipment, decreased administrative expense related to professional and legal fees and R&D expenses. In the three months ended August 31, 2021, the net loss is attributed to the increase in interest expenses related the accounting for convertible debenture as well as, expenditures related to ongoing selling, general and administrative expenses related to professional and legal fees, as well as ongoing R&D expenses. The Company recorded revenues of $68,718 for the three months ended August 31, 2023 versus $19,068 for the three months ended August 31, 2022. Such revenues consisted primarily of licensing revenues from commercial sales of our generic Focalin XR ® under the Par agreement, as well as a milestone payment from the Taro agreement during the three months ended August 31, 2023. Cost of revenue were $873,718 for the three months ended August 31, 2023 in comparison to $Nil the three months ended August 31, 2022. The cost of revenue relates to recording of $873,713 as a provision for potential clawback of royalty revenue from future sales of our generic Focalin XR ® under the Par agreement; it is in connection with licensing revenue of the product during the three-months ended August 31, 2023. Expenditures for R&D were $748,216 for the three months ended August 31, 2023 in comparison to $621,591 the three months ended August 31, 2022. The increase in the R&D expenses during the three months ended August 31, 2023 are attributed to the increase in on going R&D expenses. Selling, general and administrative expenses were $193,528 for the three months ended August 31, 2023 in comparison to $(292,296) for the three months ended August 31, 2022, resulting in an increase of $485,824. The increase is due to an increase in administrative costs, and occupancy cost, offset by a decrease in wages. As of August 31, 2023, our cash balance was $400,102. We currently expect to meet our short-term cash requirements from potential revenues for approved generic products or other collaborations, other available financing and by cost savings resulting from reduced R&D activities and staffing levels. Termination of the exclusive licensing agreements for the Company's FDA approved Desvenlafaxine ER, Venlafaxine ER and Quetiapine ER products may provide opportunity for the Company to explore options of supplying the products to multiple sources on non-exclusive bases. However, there can be no assurance that the products previously licensed and terminated will be successfully commercialized and produce significant revenues for us. We will need to obtain additional funding to, among other things, further product commercialization activities and development of our product candidates. The Company recently entered into a license and supply agreement with Taro Pharmaceuticals Inc. by which the Company has granted Taro an exclusive license to market, sell and distribute a product in Canada. There can be no assurance that the product will be successfully commercialized and produce significant revenues for us. Potential sources of capital may include, if conditions permit, equity and/or debt financing, payments from licensing and/or development agreements and/or new strategic partnership agreements. The Company has funded its business activities principally through the issuance of securities, loans from related parties (see "Related Party Transactions" for more information related to the terms of such loans and applicable maturities) and funds from development agreements. There is no certainty that such funding will be available going forward or, if it is, whether it will be sufficient to meet our needs. Our future operations are highly dependent upon our ability to source additional funding to support advancing our product candidate pipeline through continued R&D activities and to expand our operations. Our ultimate success will depend on whether our product candidates are approved by the FDA, Health Canada, or the regulatory authorities of other countries in which our products are proposed to be sold and whether we are able to successfully market our approved products. We cannot be certain that we will receive such regulatory approval for any of our current or future product candidates, that we will reach the level of revenues necessary to achieve and sustain profitability, or that we will secure other capital sources on terms or in amounts sufficient to meet our needs, or at all. There can be no assurance that we will not be required to conduct further studies for our Aximris XR product candidate, that the FDA will approve any of our requested abuse-deterrence label claims, that the FDA will meet its deadline for review, or that the FDA will ultimately approve the NDA for the sale of the product candidate in the U.S. market, or that the product will ever be successfully commercialized and produce significant revenue for us. If the Aximris XR NDA is approved, there can be no assurance that the Company and Purdue will resolve any potential asserted patent infringement claims relating to the NDA