Focalin Sales May Be Weak...But It Won't Hurt This Stock

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  • IntelliPharmaCeutics Intl Inc (USA) IPCI shares are down 48 percent year-to-date, plunging in August, and continuing a downward trend in September.
  • Brean Capital’s Jonathan Aschoff maintained a Buy rating on the company, with a price target of $8.
  • Although Focalin sales in 3Q were weak, Aschoff believes that the potential lay in its branded value.

Intellipharmaceutics reported its FY3Q15 revenue at $0.8 million and EPS at $(0.08), missing the consensus expectations of $1.1 million and $(0.05), respectively. The company’s total revenue for the quarter was contributed by licensing revenue from Par for the commercial sales of 15 and 30 mg generic Focalin XR.

Analyst Jonathan Aschoff that although Intellipharmaceutics had 43 percent share of the market for total generic prescriptions of the 15 and 30 mg strengths combined, its revenue came under pressure due to pricing conditions as well as seasonality, with overall Focalin use declining during the summer months.

Intellipharmaceutics indicated that it expects to complete the NDA filing for Rexista in 1H16. Aschoff said that this could be the next catalyst for the company’s shares.

“If not the Rexista NDA filing, we believe the next catalyst is when partner Par launches the 5mg strength, as the 5mg Focalin XR dose represented a branded value of about $73 million for Novartis (NVS, Not Rated) in its annual 2014 sales, and it was about 10% of all Focalin XR sales,” the Brean Capital report noted.

Intellipharmaceutics had $2.8 million in cash at the end of the third quarter, which appears sufficient to fund operations through YE15. The company also has $9.5 million on its ATM facility.

Aschoff believes that the company would require more funding than this to conduct clinical trials with either Rexista or Regabatin XR, “which could come from a capital raise or partnership, should a potential new partner license one, several, or all of the outstanding ANDAs.”

The EPS estimates for FY15 and FY16 have been reduced from $7 to $4.10 and from $17.60 to $12, respectively.

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Posted In: Analyst ColorReiterationAnalyst RatingsBrean CapitalJonathan Aschoff
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