Intellipharmaceutics Receives FDA Approval for Focalin XR Generic

Andrew Klips  |

Because it can be a long, expensive path to commercializing a drug, there are a lot of small drug companies that coast under the radar of Wall Street players that see the risk as outweighing the reward.  Those will the foresight to grab Intellipharmaceutics International Inc. (IPCI) as it puttered in the area of $2 this year look like they may get a bit of a payday on Tuesday.

The Toronto-based generic drug maker, which also trades on the Toronto Stock Exchange ($I:CA), said after Monday’s closing bell that the U.S. Food and Drug Administration granted approval of the company’s dexmethylphenidate hydrochloride extended-release capsules for the 15 and 30 mg strengths.  The drug is a generic of Novartis AG’s (NVS) Focalin XR, which is approved for the treatment of Attention Deficit Hyperactivity Disorder, or ADHD, as it’s commonly called. 

This is the first FDA approval for Intellipharmaceutics.

As the first filer for the generic of Focalin XR in the 15 mg dose, Intellipharmaceutics will enjoy six months of exclusivity on the drug from the time of launch.  According to Source Healthcare Analytics, Novartis generated $136 million in sales at that prescription strength in the 12 months ended October 31, 2013.

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The 30 mg strength of Focalin XR generated $69 million in sales in that same time frame.  Rival generic drugmaker Mylan Pharmaceuticals, a subsidiary of Mylan Inc. ($MYL), announced on Monday that it was first to file with the FDA for the 30 mg version and it will get the 180 days of exclusivity for this prescription.  Mylan says that it has 179 Abbreviated New Drug Applications pending FDA approval, representing more than $90 billion in annual sales.

Intellipharmaceutics uses it patented Hypermatrix technology to formulate its generics.  The technology works in the body by responding to the multivariate external environment of the gastro-intestinal tract to control the release the active ingredient of the drug at the desired time.

The FDA also tentatively approved the company’s Focalin XR generic in 5, 10, 20 and 40 mg strengths, but other companies have first right to exclusivity in those cases.  These strengths represent sales of roughly $478 million, meaning, all-tallied, Focalin XR has generated about $683 million in sales in the 12 months through October 2013.

"FDA approval of our application for a generic version of Focalin XR® is a major milestone for [Intellipharmaceutics] in several respects. We believe that the approval represents a strong validation of our core drug development competence and our controlled-release delivery technologies,” said Dr. Isa Odidi, chief executive and a co-founder of Intellipharmaceutics, in a statement last night. 

The company says it plans to immediately launch the 15 mg version through is U.S. partner, Par Pharmaceutical, the generic drug business arm of Par Pharmaceutical Companies, Inc., which was acquired by private-equity firm TPG Capital in July 2012 for $50 per share, in a deal valued at $1.9 billion.

Shares of IPCI closed trading on Monday at $1.89 for a gain of 2.7 percent.  In extended trading, the stock jumped 67 percent to $3.15 on minimal volume.  Through Monday's close, shares were down 24 percent since the start of the year.

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