IntellipharmaCeutics Intl Inc (USA) (NASDAQ:IPCI) Is A Top Biotech Pick

On July 3, we highlighted IntellipharmaCeutics Intl Inc (USA) (NASDAQ:IPCI) as one to keep an eye on in the biotechnology sector as part of our Biotech Catalyst series in this piece. This series has been incredibly profitable for our readers to date and, with IntellipharmaCeutics lined up for a potentially game-changing catalyst towards the end of this month, we suggested that the company might be the next one on the list to serve up substantial gains for anyone looking to take a position ahead of the binary event.We also noted that, in advance of the catalyst in question, IntellipharmaCeutics was set to put out second-quarter earnings and that – if the numbers had press as indicative of growth – we would probably see a share price advance based on new entrants seeking to gain exposure to the binary catalyst, but wishing to do so with a slightly reduced risk (growth inferred by strong quarterly earnings would take away some of the pressure on the near-term catalyst coming out positive), pulling the trigger.Turns out that's exactly what happened.The company reported earnings this week and the numbers look good. In response, markets are buying up IntellipharmaCeutics stock and, from its prerelease share price of around $2.40 a share, the company currently trades for $2.80 a piece – a 16% run on the news.So how does this play into our thesis ahead of the catalyst?Well, conceptually, nothing changes. IntellipharmaCeutics' lead development asset, a drug called Rexista, will still be up for debate as part of a joint meeting of the Anesthetic and Analgesic Drug Products Advisory Committee and Drug Safety and Risk Management Advisory Committee on July 26, and the outcome of this meeting will (very likely) determine the outcome of the drug's overarching development program, which is set for final decision at PDUFA on September 25, 2017.There is probably slightly less upside potential on offer now, given that the company trades for a premium on the price at which we first highlighted it, but there is still considerable room for revaluation on current price if the meeting concludes in line with a recommendation for approval based on the registration application in its current form.And as mentioned, the latest numbers reduce the risk of an exposure substantially.Why?Because even if the Rexista meeting doesn't go as planned and, subsequently, if the drug doesn't pick up approval come PDUFA, with its latest earnings release, IntellipharmaCeutics just told markets that it is far from reliant on Rexista for its continued success.During the three months ended May 2016, the company recorded revenues of $0.6 million. Fast forward 12 months, and revenues for the same period in 2017 hit $2 million – almost 3 times those recorded in 2016. With the recent launch of another asset called Seroquel XR, which a company called Mallinckrodt is responsible for commercializing, there's a good chance that third-quarter revenues could increase to the tune of 100% or more on those recorded during second quarter. A very conservative estimate (on our part) puts third-quarter revenues at between $4 million and $4.5 million. If the company can hit these numbers, it could become cash flow positive before the end of the year.If not, it's going to have to conduct a small raise to meet operational expenses until the Seroquel XR come up a bit and to bridge the gap between third-quarter and cash flow positivity. Said raise will be conducted At-Market, meaning any impact on current shareholders will be minimal (or at least, as minimal as it can be) – something that we feel said shareholders will appreciate given the current situation.All this, without Rexista even entering the equation.So, while this one is trading a little bit higher than it was when we first looked at it, we think it very much remains one to watch both ahead of potential cash flow positivity during late 2017 and – more near term – a July 26 committee meeting for Rexista.Check out our previous coverage of this stock here!We will be updating our subscribers as soon as we know more. For the latest updates on IPCI, sign up below!Image courtesy of Lenny&Merriel via FlickrDisclosure: We have no position in IPCI and have not been compensated for this article.