Dr. Isa Odidi reports

INTELLIPHARMACEUTICS ANNOUNCES FISCAL YEAR 2022 AND FIRST QUARTER 2023 RESULTS

IntelliPharmaCeutics International Inc. has released its results of operations for the year ended Nov. 30, 2022, and for the first quarter ended Feb. 28, 2023. All dollar amounts referenced herein are in U.S. dollars unless otherwise noted.

Delay in filing financial statements and other required filings

On March 7, 2023, the company announced that the Ontario Securities Commission has issued a general failure-to-file cease trade order (CTO) pursuant to National Policy 11-103, Failure to File Cease Trade Orders in Multiple Jurisdictions, dated March 6, 2023, in respect of the securities of the company as a result of the company's inability to file its annual audited financial statements and other required filings for the fiscal year ended Nov. 30, 2022, by the filing deadline of Feb. 28, 2023.

The CTO prohibits the trading, whether direct or indirect, by any person of any securities of the company in each jurisdiction in Canada in which the company is a reporting issuer for as long as the CTO remains in effect; however, the CTO provides an exception for beneficial security holders of the company who are not (and who were not as of March 6, 2023) insiders or control persons of the company and who sell securities of the company acquired before March 6, 2023, if both of the following criteria are met: (i) the sale is made through a foreign organized regulated market, as defined in Section 1.1 of the universal market integrity rules of the Investment Industry Regulatory Organization of Canada; and (ii) the sale is made through an investment dealer registered in a jurisdiction of Canada in accordance with applicable securities legislation.

If the default is remedied within 90 days of the date of the CTO (March 6, 2023), including any annual or interim financial statements, MD&A (management's discussion and analysis) and certifications that subsequently became due, the filing of the documents constitutes the application to revoke the CTO and no application fee will be required.

Results of operations

Fiscal year 2022

The company recorded a net loss for the year ended Nov. 30, 2022, of $2,892,394 or nine cents per common share, compared with a net loss of $5,259,342 or 17 cents per common share for the year ended Nov. 30, 2021. In the year ended Nov. 30, 2022, the net loss was attributed to the gain on sale of equipment, decreased administrative expense related to professional and legal fees, and research and development (R&D) expenses. In the year ended Nov. 30, 2021, the net loss is attributed to the increase in interest expenses related the accounting for convertible debenture as well as expenditures related to continuing selling, general and administrative expenses related to professional and legal fees, as well as continuing R&D expenses.

The company recorded revenues of $65,728 for the year ended Nov. 30, 2022, versus nil for the year ended Nov. 30, 2021. Such revenues consisted primarily of upfront payment from the Taro licence and supply agreement for the year ended Nov. 30, 2022. There was no revenue from generic Focalin XR for the year ended Nov. 30, 2021, primarily due to a marked increase in gross-to-net deductions, such as wholesaler rebates, chargebacks and pricing adjustments, which continues to date.

Expenditures for R&D were $2,149,126 for the year ended Nov. 30, 2022, in comparison with $2,661,875 for the year ended Nov. 30, 2021, resulting in a decrease of $512,749, compared with the year ended Nov. 30, 2022. In the year ended Nov. 30, 2022, the company recorded nil of expenses for stock-based compensation for R&D employees, compared with nil for the year ended Nov. 30, 2021. After adjusting for the stock-based compensation expenses discussed above, expenditures for R&D for the year ended Nov. 30, 2022, were lower by $512,749, compared with the year ended Nov. 30, 2021. The higher R&D expense during the year ended Nov. 30, 2021, was due to the allocation of losses on royalty payments for generic Focalin XR.

Selling, general and administrative expenses were $526,050 for the year ended Nov. 30, 2022, in comparison with $1,249,676 for the year ended Nov. 30, 2021, resulting in a decrease of $723,626. The decrease is due to a significant decrease in administrative costs and a decrease in wages.

The company had cash of $83,722 as at Nov. 30, 2022, compared with $771,945 as at Nov. 30, 2021. The increase in cash during the year ended Nov. 30, 2021, was due to the completion of a non-brokered private placement of 9,414,560 common shares of the company at a price of 41 Canadian cents per common share for total gross proceeds of $3,859,969 (Canadian), as well as lower expenditures for R&D, and selling, general and administrative expenses.

First quarter 2023

The company recorded net loss for the three months ended Feb. 28, 2023, of $355,738 or one cent per common share, compared with a net loss of $880,972 or three cents per common share for the three months ended Feb. 28, 2022. For the three months ended Feb. 28, 2022, the net loss is attributed to expenditures related to continuing selling, general and administrative expenses related to professional and legal fees, as well as continuing R&D expenses, offset by an increase in licensing revenue. For the three months ended Feb. 28, 2023, the net loss is attributed to higher accrued interest expenses as a result of changes to the accreted interest rates due to extensions of debentures, and higher general, selling and administrative expenses, offset by licensing revenues from commercial sales of generic Focalin XR.

The company recorded revenues of $326,343 for the three months ended Feb. 28, 2023, versus $83,411 for the three months ended Feb. 28, 2022. Such revenues consisted primarily of licensing revenues from commercial sales of the company's generic Focalin XR under the Par agreement.

Expenditures for R&D were $448,166 for the year ended Feb. 28, 2023, were lower by $95,824, compared with the three months ended Feb. 28, 2022. The decrease in the R&D expenses are attributed to the decrease in R&D staff in the first quarter of 2023.

Selling, general and administrative expenses were $138,835 for the three months ended Feb. 28, 2023, in comparison with $260,858 for the three months ended Feb. 28, 2022, resulting in a decrease of $122,023. The decrease is due to a decrease in administrative costs and wages, offset by an increase in occupancy costs.

Liquidity and capital resources

As of Nov. 30, 2022, the company's cash balance was $83,722 and as of Feb. 28, 2023, its cash balance was $69,546. The company currently expects to meet its short-term cash requirements from potential revenues for approved generic products or other collaborations, other available financing, and by cost savings resulting from reduced R&D activities and staffing levels, as well as quarterly profit share from Par. Effective May 5, 2021, the company's exclusive licence agreements with Tris Pharma Inc. for generic Seroquel XR, generic Pristiq and generic Effexor XR were mutually terminated. Products were never supplied nor distributed under the licences. Termination of the exclusive agreements may provide opportunity for the company to explore options of supplying the products to multiple sources on non-exclusive bases. However, there can be no assurance that the products previously licensed to Tris Pharma will be successfully commercialized and produce significant revenues for the company. The company will need to obtain additional financing to, among other things, further product commercialization activities and development of its product candidates. It recently entered into a licence and supply agreement with Taro Pharmaceuticals Inc. by which the company has granted Taro an exclusive licence to market, sell and distribute a product in Canada. There can be no assurance that the product will be successfully commercialized and produce significant revenues for the company. Potential sources of capital may include, if conditions permit, equity and/or debt financing, and payments from licensing and/or development agreements and/or new strategic partnership agreements. The company has funded its business activities principally through the issuance of securities, loans from related parties and funds from development agreements. There is no certainty that such financing will be available going forward or, if it is, whether it will be sufficient to meet the company's needs. The company's future operations are highly dependent upon the company's ability to source additional financing to support advancing its product candidate pipeline through continued R&D activities and to expand its operations. The company's ultimate success will depend on whether its product candidates are approved by the U.S. Food and Drug Administration (FDA), Health Canada or the regulatory authorities of other countries in which the company's products are proposed to be sold, and whether the company is able to successfully market its approved products. The company cannot be certain that it will receive such regulatory approval for any of its current or future product candidates, that it will reach the level of revenues necessary to achieve and sustain profitability, or that it will secure other capital sources on terms or in amounts sufficient to meet its needs or at all.

There can be no assurance that the company will not be required to conduct further studies for its Aximris XR product candidate, that the FDA will approve any of the company's requested abuse-deterrence label claims, that the FDA will meet its deadline for review or that the FDA will ultimately approve the NDA for the sale of the product candidate in the United States market, or that the product will ever be successfully commercialized and produce significant revenue for the company. If the Aximris XR NDA is approved, there can be no assurance that the company and Purdue will resolve any potential asserted patent infringement claims relating to the NDA within a 30-day period following the final approval as provided in the stipulated dismissal agreement of the Purdue litigations. There can be no assurance that the Purdue parties will not pursue an infringement claim against the company again. There can be no assurance that the products previously licensed to Tris Pharma will be successfully commercialized and produce significant revenues for the company. There can be no assurance that of the company's products or product candidates can be successfully commercialized and produce significant revenues for the company.

About IntelliPharmaCeutics International Inc.

IntelliPharmaCeutics is a pharmaceutical company specializing in the research, development and manufacture of novel and generic controlled-release and targeted-release oral solid dosage drugs. The company's patented Hypermatrix technology is a multidimensional controlled-release drug delivery platform that can be applied to a wide range of existing and new pharmaceuticals. IntelliPharmaCeutics has developed several drug delivery systems based on this technology platform, with a pipeline of products (some of which have received FDA approval) in various stages of development. The company has ANDA and NDA 505(b)(2) drug product candidates in its development pipeline. These include the company's Oxycodone ER based on its proprietary nPODDDS novel point-of-divergence drug delivery system (for which an NDA has been filed with the FDA) and Regabatin XR (pregabalin extended-release capsules).

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