Ms. Isa Odidi reports

INTELLIPHARMACEUTICS ANNOUNCES THIRD QUARTER 2023 RESULTS

IntelliPharmaCeutics International Inc. has released the results of operations for the three and nine months ended Aug. 31, 2023. All dollar amounts referenced herein are in United States dollars unless otherwise noted.

Highlights:

• The company reported that the five nominees, each of whom was an incumbent director of the company, identified in the management information circular dated Aug. 1, 2023, were elected as directors of the company at the annual meeting of shareholders of the company held Sept. 14, 2023. Other resolutions tabled for consideration at the meeting, as set out in the circular, were also approved by shareholders of the company.
• On June 5, 2023, the company filed its annual audited financial statements for the year ended Nov. 30, 2022, as well as the interim (Q1 2023) financial statements, MD&A (management's discussion and analysis) and the required certifications. The Ontario Securities Commission (OSC) was satisfied that the company had filed the continuous disclosure documents required within the time specified in the failure-to-file cease trade order (CTO), then in effect, and revoked the CTO June 7, 2023.
• On March 7, 2023, the company had announced that the OSC had issued a general failure-to-file 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 prohibited 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 and certifications that subsequently became due, the filing of the documents constitutes the application to revoke the CTO and no application fee would be required.

Highlights continued:

• On Feb. 3, 2023, the company had announced that its annual audited financial statements for the fiscal year ended Nov. 30, 2022, related management's discussion and analysis, and accompanying chief executive officer and chief financial officer certificates, and annual information form for the fiscal year ended Nov. 30, 2022, due Feb. 28, 2023, will not be filed by the filing deadline.
• In August, 2022, the company announced that it has 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 in Canada, desvenlafaxine extended-release tablets in the 50 milligrams (mg) and 100 mg strengths (the licensed product) approved for sale in the Canadian market by the Pharmaceutical Drugs Directory (PDD) of Health Canada.
• In February, 2022, the company received marketing approval for the Canadian market from Health Canada (notice of compliance) for generic pristiq (desvenlafaxine succinate extended-release tablets) in the 50 and 100 mg strengths.

Results of operations

The company recorded a net loss for the three months ended Aug. 31, 2023, of $1,889,227 or six cents per common share, compared with a net loss of $296,043 or one cent per common share for the three months ended Aug. 31, 2022. For the three months ended Aug. 31, 2023, 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 (research and development) expenses, as well as recording of $873,713 as a provision for potential clawback of royalty revenue from future sales of the company's generic Focalin XR under the Par agreement; it is connected with licensing revenue of the product during the three months ended Aug. 31, 2023. In the three months ended Aug. 31, 2022, the net loss was attributed to the gain on sale of equipment, decreased administrative expense related to professional and legal fees, and R&D expenses. In the three months ended Aug. 31, 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 $68,718 for the three months ended Aug. 31, 2023, versus $19,068 for the three months ended Aug. 31, 2022. Such revenues consisted primarily of licensing revenues from commercial sales of the company's generic Focalin XR under the Par agreement as well as a milestone payment from the Taro agreement during the three months ended Aug. 31, 2023. Cost of revenue was $873,718 for the three months ended Aug. 31, 2023, in comparison with nil for the three months ended Aug. 31, 2022. The cost of revenue relates to recording of $873,713 as a provision for potential clawback of royalty revenue from future sales of the company's generic Focalin XR under the Par agreement; it is in connection with licensing revenue of the product during the three months ended Aug. 31, 2023.

Expenditures for R&D were $748,216 for the three months ended Aug. 31, 2023, in comparison with $621,591 for the three months ended Aug. 31, 2022. The increase in the R&D expenses during the three months ended Aug. 31, 2023, is attributed to the increase in continuing R&D expenses.

Selling, general and administrative expenses were $193,528 for the three months ended Aug. 31, 2023, in comparison with negative $292,296 for the three months ended Aug. 31, 2022, resulting in an increase of $485,824. The increase is due to an increase in administrative costs and occupancy cost, offset by a decrease in wages.

As of Aug. 31, 2023, the company's cash balance was $400,102. 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. Termination of the exclusive licensing agreements for the company's FDA-approved (U.S. Food and Drug Administration) desvenlafaxine ER, venlafaxine ER and quetiapine ER products 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 and terminated 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 the company's product candidates. The company 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, payments from licensing and/or development agreements and/or new strategic partnership agreements. The company has financed 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 its ability to source additional funding 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 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 the company's 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 any of our 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).

The consolidated financial statements, accompanying notes to the consolidated financial statements, and the management's discussion and analysis, for the three and nine months ended Aug. 31, 2023, will be accessible on IntelliPharmaCeutics's website and will be available on SEDAR+.

We seek Safe Harbor.