Mackie cuts Intellipharmaceutics to sell

Mackie Research Capital downgraded Intellipharmaceutics International (NASDAQ, TSX:IPCI) to “sell” from “speculative buy” and slashed its price target to $1 from $6 after a FDA advisory committee voted 22-1 against recommending approval of Rexista. The stock slumped $1.13 to close at $1.36 on July 27.

Rexista is an oxycodone hydrochloride extended release and is designed as an abuse-deterrent opioid analgesic for the treatment of moderate-to-severe pain.

The committee voted against approval because of certain safety concerns and a lack of clinical data, as no Category 2 and 3 studies were conducted with Rexista, even though it showed bioequivalence to Purdue’ Pharma’s Oxycontin.

“We believe it would take Intellipharmaceutics a significant amount of time and money to conduct safety and Category 2 and 3 studies,” writes analyst Andre Uddin.

“It's a shame, as we believe Intellipharmaceutics has an excellent abuse-deterrent formulation. However, the company did not conduct sufficient trials to meet FDA guidance. In retrospect, a partner could have helped build a better clinical package,” he added.

Citing an acceleration of the FDA’s approval process for generic drugs, Mr. Uddin said he is taking a more conservation stance on Intellipharmaceutics’ generic drug sales. “Based on our new estimates, Intellipharmaceutics could have a cash crunch.”