IntelGenx Technologies Corp (IGXT)

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IntelGenx: Looking Towards A Pivotal Year Ahead
Investment Highlights:
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Forfivo™ Traction Expected To Accelerate. We note that Forfivo™ has
now been available in the U.S. for roughly six months, and that IntelGenx's
partner Edgemont Pharmaceuticals appears to have dealt with most of the
initial snags that impacted the launch of the drug. Accordingly, therefore,
we anticipate meaningful acceleration in Forfivo™ prescription volumes in
the coming months. While we do not expect the drug to become a massive
seller, we note that even a relatively modest revenue base would likely have
substantial impact on IntelGenx's bottom line, and should be sufficient to
drive the company towards profitability. We note that IntelGenx continues to
exhibit a cost-effective operational approach, burning roughly $2mm or less
per year. We reiterate our Buy rating and 18-month price target of $3.00 per
share on IGXT.
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Rizatriptan 505(b)(2) Application Filed. In March 2013, IntelGenx
reported that it had filed for approval of an oral film-based proprietary
formulation of rizatriptan, a well-known anti-migraine drug belonging
to the triptan class. Rizatriptan, which was originally developed and
commercialized by Merck & Co. (MRK/NYSE, Not Rated) under the trade
name Maxalt, had sales of $638mm in 2012. The patent protection on Maxalt
has now expired. We believe that, even in the face of generic competition,
it should be possible for IntelGenx's oral film formulation to eke out a solid
niche in the migraine market, particularly as the company's delivery approach
provides substantial advantages from an absorbability perspective.
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Management Transition Announced. IntelGenx recently appointed Dr.
Rajiv Khosla, a widely-respected industry veteran who previously spent
several years at Biovail Corporation - now Valeant Pharmaceuticals
International (VRX/NYSE, Buy) - as Chief Scientific Officer and Chief
Operating Officer. Dr. Khosla is also slated to assume the post of CEO
effective January 2014. Horst Zerbe, the company's founder and current CEO,
is expected to stay on as Chairman of the Board of Directors and is slated to
continue to provide expertise on formulation, drug manufacturing and R&D.
From our perspective, the appointment of Dr. Khosla is a solid step forward
for IntelGenx and should enable the firm to operate more aggressively from
an out-licensing and partnership standpoint.
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Additional Catalysts Expected Near-Term. We believe that 2013 is likely
to be a watershed year for IntelGenx because this is the first time that
the company is in position to reap rewards from a marketed product -
Forfivo - which is in full ramp mode, while simultaneously filing other
drug candidates for approval with the FDA. In our view, even one or two
regulatory submissions should catch the eye of discerning investors, the
majority of whom we continue to believe are unaware of the potential inherent
in IntelGenx's diversified product candidate portfolio and capital-efficient
business model.

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