$IPCI Intellipharmaceutics’ Shareholders Optimistic Generics Will Bring Stability, While Opiate Drug Rexista Will Resurrect Company’s Recovery

 

  • 6 Potential Generic Approvals in Coming Year
  • FDA Advisory ruling Issues Addressed
  • Opiate Drug Companies Looking for Positive Public Relations
  • Generic Drug Sales  Could Stabilizing Operations
  • Oxycodone ER Up for Approval This Year

Intellipharmaceutics (IPCI) is currently betting on the novel abuse deterrent aspects for Rexista, their extended release Oxycodone drug, which will turn the mouth and nasal passage blue if snorted and act an irritant in the nose. Unfortunately, the FDA has declined its approval until they receive more data.

The opioid epidemic is in the headlines again, this time in Federal court.  Some of the high-profile defendants include pharmaceutical giants Johnson & Johnson (JNJ), Purdue Pharma and Teva Pharmaceuticals (TEVA), large distributors McKesson (MCK) and Cardinal Health (CAH) and pharmacy chains like CVS (CVS), Rite Aid (RAD) and Walgreens.  Opioids like Oxycodone are the primary drug of choice for arthritis sufferers.     

Last week, IPCI bounced off a low of $0.55 as it announced an offering which was slightly above the market for $3.5 million at $.60 per share and purchase warrants at $.60 as well.  Investors fear the potential dilution will hinder the future recovery of the company, but are optimistic the Oxycodone ER and potential approval of others will resurrect the company.    

 

Robust Product Pipeline

IPCI is a Canadian-based pharmaceutical company engaged in the research, development and manufacture of controlled-release and targeted-release oral solid dosage drugs. They have active licensed compounds that they manufacture in Toronto and also have compounds in clinical development awaiting regulatory approval.  Its Hypermatrix technology is a multidimensional controlled-release drug delivery platform that is applied to the development of a range of existing and new pharmaceuticals. The pipeline can be broken down into two regulatory pathways, the New Drug Application (NDA) via the 505(b)(2) and the Abbreviated New Drug Application (ANDA).  The 505(b)(2) pathway takes existing approved drugs and makes them better allowing for new patent protection. The different diseases they are going after are neurology, cardiovascular, gastrointestinal tract, diabetes, and pain. The company currently has a dozen (12) generic pharmaceutical meds and 6 waiting to be approved.

Patent Tiff with Purde Spells Opportunity

It’s standard to procedure to file patents on new formulations and 9 times out of 10 the patent holder will claim patent infringement.  This is what happened last year on April 7, 2017 when Purdue sent IPCI a notice of patent infringement when IPCI filed an NDA for Oxycodone ER.  Purdue claimed infringement on 6 out of 16 patents. For legal reasons the FDA stayed the approval of the drug for 30 months or earlier if the courts claim the patents are invalid or states no infringement has happened.  The trial is set for October 22, 2018 and the FDA 30 month stay expires on August 24, 2019.  Purdue is under extreme pressure from the press regarding the addictive nature of Oxycodone and has agreed not to market it any more.  This will put a big dent into sales and with an expanded label that doesn’t require food to be taken with this new formulation and the anti-tamper properties of the drug IPCI could be a prime takeover candidate or licensee.

Possible Acquisition Target?

There has been an abundance of press covering the opioid epidemic. At a time where everyone is pointing a finger at someone in regards to who is to blame, big opioid manufacturers like JNJ and TEVA seem to be on the hot seat. Lawsuits are running rampant as doctors feel misled by these manufacturers as to the true addictive nature of these drugs.

Rather than spend valuable funds filing lawsuits and fighting patent disputes, these manufacturers can receive positive public relations by acquiring a company like IPCI who has an intellectual property such as Oxycodone ER. Purdue, JNJ, and TEVA are ideal candidates for this technology as they have the means to monetize the new drug to their established customer base.         

 

Moving Forward

IPCI’s newly raised money will be a boost of confidence for investors who have seemed to have lost hope and the company’s share price has drifted lower. Intellipharmaceutics seem to have a 2 pronged strategy for growing its revenue stream and continuing on with drug development.  The will continue manufacturing their 12 generics within their 25,000 SF facility, which employs over 50 people, while pushing for approvals of 6 other meds.

Generic – The other part of the plan was to focus on growing sales of the generics.  Sales numbers could tip the scales for the company if they are positive. Q1 numbers are expected soon. IPCI did mention that they were working with suppliers to get better pricing which means they are doing volume manufacturing but investors won’t know how to sort this out until the next earnings release.  Investors seem to be betting that this may be the bottom in the stock. The company has also indicated that it is looking for international opportunities for it product portfolio especially in China where margins are better. They did take a trip to China for marketing and distribution recently. It’s possible that something might get done but their focus seems to be on the Oxycodone ER at the moment.  

More On Oxycodone ER

Of the 6 waiting for approval and the one that has investors cheering “show me the money”, is the Oxycodone ER drug, which will be discussed in their next meeting with the FDA this fall.

Oxycodone ER – this is the Rexista drug less the blue coloring.  When going up against the FDA advisory group they wanted data on the social effect of the blue dye on the body.  This complicated the study quite a bit and would have added significant costs. The FDA is under a lot of pressure to get drugs that control the opioid epidemic in the United States. This epidemic is a national priority supported by President Trump.  Opioid use is as high as 30% in the OAK indication.  Approximately 21 million people in the US are currently diagnosed with OAK and over 54 million people who are currently diagnosed with arthritis.  There is tremendous political clout looking for novel solutions.  

The essence of Oxycodone ER is that it makes abuse harder if not difficult.  Oxycodone in its current form can be inhaled or crushed and hydrated for a needle.  Oxycodone ER turns into a thick gel which is very difficult for an abuser to inject.  Excipients are added to the formulation that cause irritation to the nostrils if inhaled.  The other benefit is normally patients have to take Oxycodone with food but Oxycodone ER has no food effect.  The FDA Response letter wanted additional safety and efficacy data from human abuse studies.  The FDA gave them an additional year from September 2017 so within the next 6 months there should be a resubmission.    

 

Possible NASDAQ Delisting but Not Likely

IPCI enjoys a NASDAQ listing but it has fallen below the minimum market value requirement of a $35.0 million valuation for 10 consecutive days.  That means effective March 19, 2018 it could receive a notice of delisting but that is nothing investors should immediately worry about because they will almost certainly appeal it and come up with a plan. The recent round of funding suggests that at least HC Wainwright feels that they have a good argument to present to NASDAQ to apply for another extension.  If they get the extension it could provide another reason to buy the stock.  

Investment Summary

The company seemed to stabilize in the $0.60 area and may be here for some time. Looking at the long term standpoint, if the company can get the proper funding and utilize the large 25,000 sq ft facility to manufacture their 12 generics, while getting FDA approval for something new, we can see a breakout. The generics should keep the company is cruise mode, and while the recent funding will help kick start the generic manufacturing side of things, its the new drugs that will make or break them by year end. The key to this investment is ensuring that dilution is done. The intellectual property portfolio has great promise.  If one drug can be approved under the PODRAS technology the company could have an incredible looking pipeline of 505 (b)(2) drugs for development. Last, look for government mandates on opioids that could benefit what IPCI has to offer as a solution to the epidemic, such as its addiction deterrent.   

Disclosure/Disclaimer: PSInvestor.com has not been compensated for the above mentioned article, nor does it hold a position in the company. To read our full disclaimer, please click here.  

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