IntelliPharmaCeutics Rips 162% Higher on an FDA Approval Print E-mail
By Brian Wilson-Lead Contributor   
Wednesday, 20 November 2013 08:57
Yesterday’s trading was overwhelmingly bullish for the controlled release and targeted drug developer Intellipharmaceutics (NASDAQ: IPCI) after the FDA gave final approval to the company’s dexmethylphenidate hydrochloride extended-release capsules at the 15 and 30 mg doses on Monday night. Tuesday morning (yesterday) the company opened at $3.42 and surged higher throughout the trading day, pausing at the psychological $5/share barrier for the rest of the day.

 In this morning’s premarket trading, it appears that more buyers have been drawn to the stock. At time of writing, the stock is trading another 11% higher, at $5.50/share.

IPCI is still waiting on news for the 5, 10, 20, and 40 mg dexmethylphenidate XR capsules, although the existing decisions made by the FDA support the likelihood of more approvals. IntelliPharma, along with partner Par Pharmaceutical, intends to market the drug immediately to take advantage of the 180-day exclusivity window that the FDA will grant.

Focalin XR

Dexmethylphenidate is also known as Focalin, and is now-generic treatment for ADHD to be used in conjunction with other forms of treatment. The drug is well supported by clinical trials that demonstrate its efficacy and tolerability/safety, especially in children.

Extended release formulations of psychostimulants are increasingly popular. Focalin XR became a blockbuster reformulation used in the treatment of ADHD, generating about $702 M in revenues last year. Now that this formulation is generic, it can be commercialized by drug manufacturers after the exclusivity period granted for intellipharmaceutics and par pharma. However, this exclusivity period should allow intellipharma and par to generate very high revenues for a while.

Other pipeline components

Although Focalin XR is responsible for the recent surge in IPCI, note that the company’s pipeline is quite expansive. There are generic agents that are targeting much larger indications at various stages of development. The following pipeline diagram (updated October 2013) was taken from the website of intellipharmaceutics:

 

The Intellipharmaceutics pipeline consists of drugs that are utilizing proprietary Hypermatrix™ controlled release technology, which is a flexible platform designed for virtually any small molecule. The company specializes in finding niche markets where their CR platform may be useful.

The company targets both immediate-release branded drugs, as well as controlled-release drugs. These require NDA and ANDA submissions to the FDA, respectively. For NDA submissions, the company will look to develop an immediate-release drug into a once per day formulation. For ANDA submissions, like the submission that resulted in recent approval for Focalin XR, the company will have to directly compete with the generic pharma industry.

I think that in coming years, investors may be especially interested in the XR formulation for Lyrica (pregabalin), which is one of Pfizer’s best selling drugs. This pain medication brings nearly $4 B in total annual revenues for the company, and has created a huge potential market for extended release formulations. Intellipharmaceutics is well positioned to take advantage of this patent expiration, along with many other formulations that are included in the pipeline.

What is great about a highly diversified pipeline is that it protects investors against massive losses in the event that one particular drug development program fails. This is may be especially true for a reformulated drug developer like IPCI, since these types of companies often trade at down-to-earth valuations. However, this doesn’t necessarily impede growth in share price given that the company is able to successfully develop and commercialize a line of products.

Going forward, investors should start paying close attention to the financial data produced by IPCI, as it will determine the feasibility of their ANDA strategy going forward.




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