July 14, 2010

Intellipharmaceutics Announces Second Quarter 2010 Results

TORONTO, July 14, 2010 (GLOBE NEWSWIRE) -- Intellipharmaceutics International Inc. (Nasdaq:IPCI) (TSX:I), a pharmaceutical company specializing in the research, development and manufacture of novel or generic controlled release and targeted release oral solid dosage drugs, today reported the results of operations for the three and six month periods ended May 31, 2010. All comparative information is that of the predecessor company Intellipharmaceutics Ltd. ("IPC Ltd").   All dollar amounts referenced herein are in United States dollars unless otherwise noted.

The loss for the three month period ended May 31, 2010 was $0.3 million, or $0.03 per common share, compared with a loss of $0.2 million, or $0.02 per common share for the three month period ended June 30, 2009. The loss for the six month period ended May 31, 2010 was $1.7 million, or $0.16 per common share, compared with a loss of $0.8 million, or $0.09 per common share for the six month period ended June 30, 2009. The increased period-over-period loss is mainly due to increases in both research and development expenses and increases in selling, general and administrative expenses. The significant decrease in the Company's loss during the second quarter ended May 31, 2010 compared to the first quarter ended February 28, 2010, can be mainly attributed to the fact that a drug development agreement was mutually terminated by Intellipharmaceutics and another party and as a result, unearned revenue of approximately $1.4 million was brought into income.

The Company increased research and development expenditures as a result of a stronger financial position during the three and six month period ended May 31, 2010 in comparison to the three and six month period ended June 30, 2009.  This stronger financial position is allowing Intellipharmaceutics to pursue its strategy of advancing its products from the formulation stage through product development, regulatory approval and manufacturing before out-licensing marketing and sales rights to established organizations.

The increase in selling, general and administrative expenses is due to an increase in expenses related to legal fees, wages, and marketing cost and due to certain expenditures which were not incurred in the comparable period as Intellipharmaceutics was not a publicly traded company during that period.

At May 31, 2010, Intellipharmaceutics' cash totaled $4.1 million, compared with $5.0 million at February 28, 2010. The decrease is a result of cash used in operating activities which was partially offset by receipt of C$0.9 million in research & development tax credits during the three month period ended May 31, 2010. The Company believes that it may receive up to an additional C$1.1 million during the second half of fiscal 2010 comprised of other research & development tax credits. The continuation of our research and development activities and the commercialization of our products are dependent upon our ability to fund these activities through equity or debt financings, payments received under marketing and/or development agreements as well as other financing opportunities. Depending on the progress of these initiatives, the Company may elect to increase or reduce expenses associated with its research programs, and therefore the expected cash burn for fiscal 2010 cannot be projected. 

Corporate Update

  • On March 11, 2010 we announced that Novartis Pharmaceuticals Corporation and Celgene Corporation had tentatively settled their patent suit in the U.S. District Court for the District of New Jersey, and Elan Pharma International Ltd. had tentatively settled its patent suit in the U.S. District Court for the District of Delaware, with Intellipharmaceutics Corp., a wholly-owned subsidiary of Intellipharmaceutics International Inc., and with its licensee Par Pharmaceutical, Inc., over a generic version of the Attention Deficit Hyperactivity Disorder drug Focalin XR® (dexmethylphenidate hydrochloride), subject to regulatory and court approval. On May 20, 2010 we confirmed that the parties had stipulated to the dismissal of the litigation, and that management expected that marketing of its generic version of Focalin XR® would commence no sooner than the fourth quarter of 2012. 
  • On May 7, 2010 we announced that the U.S. Food and Drug Administration (FDA) had accepted our filing for an Abbreviated New Drug Application (ANDA) for a generic version of the antidepressant Effexor XR® (venlafaxine hydrochloride)
  • On May 20, 2010 we announced that we had taken delivery of and fully qualified our primary manufacturing equipment for the manufacture of an abuse-deterrent formulation of controlled-release oxycodone hydrochloride, and that the manufacture of clinical batches using that equipment has commenced.
  • On June 14, 2010 we announced we had filed an ANDA with the FDA for a generic version of Protonix® (delayed release pantoprazole sodium).
  • On July 2, 2010 we announced that Wyeth LLC, a wholly owned subsidiary of Pfizer Inc., filed suit against us for patent infringement in the United States District Court for the District of Delaware and for the Southern District of New York, relating to our generic version of Effexor XR® (venlafaxine hydrochloride extended release) capsules. Lawsuits such as these are an ordinary and expected part of the process of obtaining approval to commercialize a generic drug product in the United States. We remain confident that our generic versions of Effexor XR® do not infringe those patents. We intend to vigorously defend against the complaints described above.

About Intellipharmaceutics

Intellipharmaceutics International Inc. is a pharmaceutical company specializing in the research, development and manufacture of novel or generic controlled release and targeted release oral solid dosage drugs. The Company's patented Hypermatrix™ technology is a unique and validated 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 products in various stages of development in therapeutic areas that include neurology, cardiovascular, GIT, pain and infection.

The Intellipharmaceutics International Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=6957

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 regarding the status of development 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 revenues and projected costs. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "expects", "plans", "anticipates", "believes", "estimated", "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 these forward-looking statements. You should not place undue reliance on our forward-looking statements, which are subject to a multitude of risks and uncertainties that could cause actual results, future circumstances or events to differ materially from those projected in the forward-looking statements. These risks include, but are not limited to, securing and maintaining corporate alliances, the need for additional capital and the effect of capital market conditions and other factors, including the current status of our programs, on capital availability, the potential dilutive effects of any financing , the timing of our programs to research, develop and commercialize our products, the timing and costs of obtaining regulatory approvals, our estimates regarding our capital requirements and future revenues, the timing and amount of investment tax credits, and other risks detailed from time to time in our public disclosure documents or other filings with the securities commissions or other securities regulatory bodies in Canada and the U.S. Additional risks and uncertainties relating to IPC and our business can be found in the "Risk Factors" section of our annual information form dated February 26, 2010, as well as in our other public filings. 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 unaudited interim consolidated financial statements, accompanying notes to the unaudited interim consolidated financial statements, and Management's Discussion and Analysis for the three and six month periods ended May 31, 2010, 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.
Unaudited consolidated balance sheets
As at May 31, 2010 and November 30, 2009
(Stated in U.S. dollars)
  May 31, November 30,
  2010 2009
  $ $
Assets  
Current  
Cash 4,068,780 8,014,492
Accounts receivable 2,659 5,427
Investment tax credits 1,135,525 1,840,044
Prepaid expenses and sundry assets 128,304 175,248
  5,335,268 10,035,211
   
Property and equipment, net  1,056,008 1,046,121
  6,391,276 11,081,332
   
Liabilities   
Current  
Accounts payable 471,004 1,323,368
Accrued liabilities 220,181 540,604
Employee costs payable 526,276 501,114
Current portion of capital  
lease obligations 27,460 35,595
Due to related parties 1,562,604 2,360,181
  2,807,525 4,760,862
   
Warrant liability 97,655 226,268
Capital lease obligations 3,774 12,862
Deferred revenue 8,906 1,449,326
  2,917,860 6,449,318
   
Shareholders' equity  
Capital stock  
Authorized  
Unlimited common shares without par value  
Unlimited preference shares  
Issued and outstanding  
10,907,057 common shares  16,969 16,969
(November 30, 2009 - 5,997,751 special voting shares  
3,329,965 common shares), with $0.01 par value  
Additional paid-in capital 18,811,489 18,263,340
Accumulated other comprehensive loss (304,591) (341,844)
Deficit (15,050,451) (13,306,451)
  3,473,416 4,632,014
   
  6,391,276 11,081,332
 
Intellipharmaceutics International Inc.
Unaudited consolidated statements of operations and comprehensive loss
For the three and six months period ended
     
(Stated in U.S. dollars)    
  Three Months ended  Six Months ended
  May 31, 2010 June 30, 2009 May 31, 2010 June 30, 2009
     
  $  $  $  $ 
     
Revenue    
Research and development 1,449,624 118,460 1,452,221 342,832
     
Expenses    
Cost of revenue --  87,077 --  114,196
Research and development  1,174,769 253,226 1,874,427 660,017
Selling, general and administrative  682,628 202,261 1,386,657 322,147
Depreciation 60,898 103,939 115,883 201,649
  1,918,295 646,503 3,376,967 1,298,009
     
Loss before the undernoted (468,671) (528,043) (1,924,746) (955,177)
Fair value adjustment of warrants 110,157 --  132,021 -- 
Net foreign exchange gain 46,592 319,106 74,956 186,629
Interest income 20,101 225 23,734 1,518
Interest expense (24,626) (15,950) (49,965) (30,642)
Loss (316,447) (224,662) (1,744,000) (797,672)
Other comprehensive (loss) income    
Foreign exchange translation adjustment 29,907 (278,180) 37,253 (168,150)
Comprehensive loss (286,540) (502,842) (1,706,747) (965,822)
     
Loss per common share, basic and diluted (0.03) (0.02) (0.16) (0.09)
     
Weighted average number of common     
shares outstanding, basic and diluted 10,907,057 9,327,716 10,907,057 9,327,716
CONTACT:  Intellipharmaceutics International Inc.
          Glenn Neumann, Director of Investor Relations
          416-798-3001 x123
          investors@intellipharmaceutics.com

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