Fantastic report Gary!
Here is the specific part re IGXT in this interview with Blumont's Cleland:
TLSR: What’s the next company you’d like to talk about?
HC: IntelGenx is the company through which I learned about the 505(b)(2) pathway, and why that pathway is so attractive to me. It’s a drug delivery company that takes existing, commercialized drugs and ports them onto different delivery modalities, making them better from a patient compliance perspective or from a time-to-onset-of-action perspective. The existing drugs the company is working with have commercial revenues in the hundreds of millions to several billion-dollar range.
IntelGenx is about to launch its antidepressant drug, having received FDA approval in November 2011, and has a pipeline of eight drugs being developed via the 505(b)(2) pathway. The company is a table-pounder, simply on the basis that it has an approved drug and a market cap of only $30M. It is truly one of the most dramatic valuation disconnects that I am aware of. Full disclosure: Funds that I manage control about 12% of the company.
A migraine drug called rizatriptan is a good example of one of IntelGenx’s pipeline drug applications. The time to onset of action of a migraine medication is very important. If the medication is delivered in time, it can cut a migraine off at its knees and save the patient from an ugly 12–36 hours. On the other hand, if a patient pops a pill and it takes 45 minutes to kick in, a migraine may get the foothold it needs to overwhelm the medication.
IntelGenx is moving rizatriptan onto a thin film strip. The time to onset of action for a drug delivered via sublingual strip is much faster than for the pill form. Annual sales of prescription migraine drugs on a global basis are probably more than $5B; annual sales of rizatriptan were over $600M in 2011. If IntelGenx can introduce a better form of the drug, cutting the time to onset of action in half or more—or even if the film cuts it by a third—doctors and patients will be very attracted. IntelGenx’s drug could gain market share quickly in the migraine medication area. In another example, the company is moving an erectile dysfunction drug onto a strip. You can imagine reasons you may want quicker onset of action with that.
The bottom line from an investor perspective is that, as of the close on Aug. 3, 2012, the stock is lower than it was before the company’s antidepressant received FDA approval on Nov. 11, 2011; lower than it was before its December 2011 codevelopment and commercialization deal with Par Pharmaceutical Inc.; and lower than it was before the announcement of a commercialization partner for its antidepressant. I would argue that at $1.00 or lower, the only thing an investor is paying for is the antidepressant, meaning that you are getting the entire thin-film delivery platform and eight pipeline drugs for free.
I suggest that investors check out the analyst report published two weeks ago by Ram Selvaraju of Aegis Capital Corp., initiating coverage on IntelGenx with a $2.50/share, 18-month target. Ram is known as one of the few analysts willing to pick up coverage on sub-$50M market cap companies—as long as he thinks that he can make investors significant returns. One of his more notable sub-$50M initiations was Amarin, back in 2009, when it had a market cap of about $40M.
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