IntelGenx Technologies Q4 2023 Earnings Call Transcript

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March 21, 2024

There are 9 speakers on the call.

Operator

Greetings. Welcome to the IntelGenx Fourth Quarter and Full Year 2023 Results Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. Please note this conference is being recorded.

Operator

I will now turn the conference over to your host, Stephen Kilmer, Investor Relations at IntelGenx.

Speaker 1

Good morning, everyone, and thank you for joining us on today's call. With me on the line are Dwight Gorham, IntelGenx's CEO Andre Godin, our President and CFO Doctor. Frank Pietrantonio, our Director of Clinical Research and Tommy Kenny, our Senior Vice President and General Counsel. Before we begin, I would like to remind you that all amounts mentioned today are in U. S.

Speaker 1

Dollars unless otherwise mentioned, and today's call may contain forward looking information that represents our expectations as of today and accordingly are subject to change. We do not undertake any obligation to update any forward looking statements except as may be required by U. S. And Canadian securities laws. A number of assumptions were made by us in preparing these forward looking statements, which are subject to risks and results may differ materially.

Speaker 1

Details on these risks and assumptions can be found in our filings with the U. S. And Canadian Securities Commissions. I would now like to turn the call over to Mr. Gorham.

Speaker 1

Dwight?

Speaker 2

Thank you, Steve. Good morning, everyone, and thank you for joining us for the IntelGenx Q4 and full year 2023 conference call. On today's call, I will provide a corporate update and discuss the progress we have made on our key pipeline projects consistent with what we have previously committed to shareholders. Then Andre will review our financial results. Following that, we will open up the line for your questions.

Speaker 2

I will now update you on our key programs, beginning with RIZAPORT. During the Q3 of 2023, we received the 1st purchase order for the RIZAPORT, the U. S. Market name for RIZAPORT from our commercial customer Gensco Pharma. This represents a significant milestone for the company as it was our first purchase order for the commercial supply of a pharmaceutical oral film.

Speaker 2

We commenced production in December 2023 and expect to ship the ordered reza film product to Gensco in Q2 2024 for immediate launch to market. Unfortunately, as of the end of 2023, we saw no appreciable progress by Axaltas, our partner for RIZAPORT in Spain. Consequently, by mutual agreement with Axaltas, we have jointly started the process of finding a new commercial partner with production promotion capabilities ideally suited to maximize RIZAPORT's commercial success on the European market and expand the product's commercial availability in EU markets beyond Spain. Turning to our buprenorphine buccal film program, we understand from Xyremed, the agent and affiliate of our co development partner, Chemo Research, that is still in discussion with the FDA regarding the amended abbreviated new drug application submitted to the agency in September. We will of course update investors on the status of the ANDA as additional information becomes available.

Speaker 2

Now turning to our cannabis business, we are happy we have entered into a settlement agreement with Tilray in November. The settlement included a purchase order for 3 new products, namely CBD-twenty, THC-ten and a 10.10 combined CBD THC. Due to subsequent requests by Tilray, we should be in a position to complete the updated formulation work by May, June and the products will then be scheduled for production and delivery. Turning to Animal Health, we are delighted to advance that important business via development and licensing agreements signed in December with a wholly owned subsidiary of Covenant Animal Health. Under the terms of the development agreement, Covenant Animal Health will fund development and manufacturing of the beta film based drug product.

Speaker 2

The license agreement will give Covenant Animal Health exclusive rights to exploit the product in the field for non human applications. In return, IntelGenx will receive royalties on a worldwide net sales of the product. Ahead of commercialization, IntelGenx will manufacture the product on a worldwide basis for clinical development. The parties also anticipate entering into a subsequent commercial supply agreement pursuant to which IntelGenx will supply the product to Covenant Animal Health. As much as we are excited by this current partnership with an industry leader like Covenant Health, we also think that it could important revenue inflection point for our overall Vethafilm business.

Speaker 2

Covenant is a well recognized player in the space and as such, the partnership should help open the doors to several additional commercial opportunities for proprietary VITASILM drug delivery platform as it advances towards becoming a standard administration method for companion animals in the future. In support of that, last month we unveiled very encouraging results from a Vethafilm proof of concept study, which was conducted through a research collaboration with UPEI, 1 of North America's leading veterinary universities. As we have discussed in the past, the reliable administration of medications to dogs and cats is a concern for many owners and veterinarians. As I am sure many of you can test, there are few prescription medications that dogs and cats will legally accept and forced administration of capsules, tablets and liquids may be stressful for both the pet and its owner or owners. Additionally, many owners report that medicating the pet becomes more difficult with each dose, often leading to decreased owner compliance, missed doses and potentially treatment failures.

Speaker 2

The purpose of the research collaboration with UPEI was to assess palatability, owner perceived acceptability and ease of administration of the vet of healthy dogs and cats. Specifically, the study evaluated 1, exception rate of various VEDAFILM placebo formulations in dogs and cats at first exposure 2, preference between flavors of VidaFilm placebo formulations in dogs and cats 3, changes in acceptance rates over longer periods and 4, owner perception of ease of administration and acceptance and other behaviors associated with Betafilm placebo formulations. Overall, 100% of dog owners and 57% of cat owners felt the administration of better films oral films was very easy or easy. And 95% of dog owners and 82% of cat owners identified Fetaphilm as the preferred method of medication administration. Moving on to R and D, we have completed dosing in the Buna montelukast Versafilm 2A clinical trial in patients with mild to moderate Alzheimer's disease this month and expect to report initial trial results next quarter.

Speaker 2

Additionally, having now received approvals from the Swedish Medical Products Agency, the Swedish Ethical Review Authority and the Regional Biobank Center to conduct the Montparnc Montelukast Versafil Phase 2 clinical trial in patients with Parkinson's disease, we currently expect dosing in the study to be initiated before the end of the current quarter. The multicenter, randomized, double blinded, placebo trial, which is designed to assess Montelukast versafilm as an alternative to the tablet form of montelukast will be conducted at the Karolinska University Hospital in collaboration with Principal Investigator, Doctor. Per Sevingtson, who will sponsor the study through a Swedish Research Council grant worth approximately $2,000,000 Finally, earlier this month, the Phase 1b trial for our oral transmucosal formulation of DMT was initiated. The Phase 1b study is designed to evaluate the relative safety, tolerability, pharmacokinetics and pharmacodynamics of an optimized film formulation compared to an intravenous EMT. Top line results for the Phase 1b study are expected in the second half of this year.

Speaker 2

With that, I would like to turn the call over to Andre for a review of our financial results. Andre?

Speaker 3

Thank you, Dwight. Good morning, everyone. As Dwight mentioned, I'll take a few minutes to discuss the company's financial performance for the 4th quarter as well as the full year fiscal year ended December 31, 2023. For the 4th quarter, the total revenue amounted to $426,000 an increase of 146% over $173,000 for the same 3 month period last year. The change is mainly attributable to an increase in R and D revenue.

Speaker 3

Our operating costs and expenses were $2,400,000 for Q4 2023 versus 2.7 $1,000,000 for the corresponding 3 month period of 2022. For Q4 2023, the company had an operating loss of $2,000,000 down from $2,500,000 in Q4 2022 as well as adjusted EBITDA, which was negative $1,700,000 for Q4 2023, a similar improvement over negative $2,300,000 for Q4 2022. Our net comprehensive loss improved to $1,700,000 or $0.01 on a basic and diluted per share basis for Q4 2023 compared to $2,300,000 or $0.01 per basic and diluted share for the comparable year of 2022. For the full year of 2023, total revenue amounted to $1,039,000 compared to $950,000 for 2022. The full year operating costs were $10,500,000 for 2023 versus $10,400,000 for 2022.

Speaker 3

For the full year 2023, the company had an operating loss of $9,500,000 dollars compared to an operating loss of $9,400,000 for the comparable period of 2022. Net comprehensive loss was $10,100,000 or $0.06 per basic and diluted shares for 2023 compared to $11,500,000 or $0.07 per basic and diluted share for the comparable period of 2022, an improvement of $1,400,000 As of December 31, 2023, the company's cash and short term investments totaled $2,300,000 Subsequent to the year end, IntelGenx announced the launch of a Reg A offering of up to 2,000,000 shares of non traded Series A convertible cumulative preferred stock at an offering price of $10 per share for maximum offering amount of $20,000,000 dollars As we've discussed in the past, we're always trying to balance our financing needs with the goal of limiting current shareholders' solution as much as possible. After exploring several potential financing opportunities and structures in the current market of small cap and micro cap health care companies, we feel this offering provides us with the best opportunity to raise funds at a valuation that we believe is more reflective of our assets and business prospects. As we mentioned in our press release announcing the offering, with the pending U.

Speaker 3

S. Commercial launch of RIZA Film next quarter, we will be entering into a phase of anticipated rapid growth. This raise will allow us to support that while we also continue to make strategic investments in the advancement of the rest of our product pipeline and service portfolio. I will now turn the call back to Dwight.

Speaker 2

Thanks, Andre. We are looking forward to continuing to execute on our key programs and to deliver on the upcoming milestones we have discussed today. To reiterate, they are 1, the launch of the RIZA Film in the USA 2, finding a new commercial partner for the RIZA port in Spain and additional markets in Europe 3, reporting initial results of the Phase 2 Buna Monte Lucas Versafilm trial in moderate to mild Alzheimer's disease 4, initiating subject dosing in the Mont Park, Montelukast Versafilm Phase 2 clinical trial in patients with Parkinson disease and 5, completing our Reg A preferred share offering. Finally, speaking of our services business, I'm pleased to report that the new development project pipeline is highly active with several parties having confirmed interest in IntelGenx performing development work on their behalf on a fee for service basis. We expect to initiate 3 to 5 new development projects under the CDMO business model during the course of the 2024, and our new business development efforts are on their way to accomplishing this goal.

Speaker 2

With that, I will now turn the call over for questions. I would like to remind you that our forward looking statements apply to both our prepared remarks and the following Q and A. Thank you.

Operator

Your first question for today is from Hugh Kiely, a Private Investor.

Speaker 4

Good morning, Dwight, Andre, Frank and Tommy. Good update, Dwight, on the activities of IntelGenx. Just wondering would

Speaker 5

give a little bit of an overview of the rollout

Speaker 4

of RIZZIFILM to the pharmacies in Q2?

Speaker 2

I'm sorry, Kyle. Hugh, you broke up a little bit. You're asking me for the what's the rollout plan for the pharmacy?

Speaker 4

Yes, that would be if you could share that, that would be great because I've been checking my local pharmacies. They just say it's coming, but couldn't give a specific date.

Speaker 2

That actually should happen sometime, I'm guessing, and I'm not talking on behalf of Gensco because they control the final date when that goes. Sometime in the month of May, I suspect, but that's a professional opinion based on when I'm going to ship the product.

Speaker 4

Okay. That's good. And is there any further update of any additional countries beyond At this point, for the reason, no, Hugh.

Speaker 2

At this point for the reason, no, Hugh. As I said, our focus right now is finding a new partner that will service the 5 major markets in Europe at this point. We're placing our Spanish person who was supposed to be able to reach the 5 the big 5 in Europe.

Speaker 4

Okay. Thank you for that response. And any update on the progress of Todatokol? I know there was on the plan for that with the irritation study?

Speaker 2

There is no further update on that. We're still going still working on that, but still issues to be resolved.

Speaker 4

Okay. And returning back to VISITILM or progress on the pediatric film submission to the FDA?

Speaker 2

Nadine, do you want to handle that?

Speaker 6

Yes. So the pediatric film, the 5 milligram will be manufactured with the validation batches. And then we need stability data before submission. So most probably later this year.

Speaker 4

Okay. Okay. Thank you for that. And just a little bit overview with the BELBUCA with the FDA. Is any major issues in that, Dwight?

Speaker 4

Or do you think those are just sit down and clarification issues?

Speaker 2

I know that the customer, the partner is in discussion with the FDA and we're expecting communication in that regard in a relative short term in the next 3 to 4 or 5 weeks. But at this point, I don't know that there's I don't know what the issues are, Hugh. It's really between Cyramed and the FDA. And as soon as they know, they'll let us know. And if it's announceable, I will absolutely be transparently with that.

Speaker 2

Us.

Speaker 4

Okay. And before I go back in the queue, with the Endo bankruptcy plan proved any insights into the status of the future of the product?

Speaker 2

I very recently had further conversations with representatives from Endo. And those discussions are early in the game plan, but we're looking to find a path forward for specifically the specific product you're referring to. But at this point, I have no clarity on what's absolutely required. We have partners looking for it. We have potentially someone who may be interested in automating a deal for it, but that's way too immature for us to comment further.

Speaker 4

Okay. I appreciate that comment. And with the Montelukast trial ending, is the submission to the what do you call it, neutral party that does all the data analysis when the data comes back if positive, which we expect, then would the data be rolled out or seek a partner first? I know it's kind of a strategic question, but everyone's really watching that.

Speaker 2

Well, it depends on what the date is, and how it looks. We get the date in May. And depending on that, if it's good there, there's a meeting with health authorities, etcetera, to establish what the clinical and regulatory strategies need to

Speaker 1

be to move it forward.

Speaker 2

But at this point, we're still waiting we do not have the data yet. It's all being numbers are being crunched, but it's not available.

Speaker 4

Okay. Last question on the 2 way products is, is it possible to be able to that going to Canada or is that going to some other global countries?

Speaker 2

Are you still talking Montelukastian? Sorry.

Speaker 4

No. The Tilway, the 3 products you developed developing for Tilway, is that for Canada?

Speaker 2

Yes, those are for Canada.

Speaker 4

For Canada. All right. Last of my questions, loxapine, is that any chance of that progressing forward? Is that still in the queue pending all the other activities you have going on?

Speaker 2

Well, it's a twofold piece to loxapine. 1, it's in the Q because there's other things we're focusing on. And B, the market does not appear strong in the U. S. At this point for that product.

Speaker 7

Okay.

Speaker 2

We're trying to sort that part out.

Speaker 4

Okay. Thank you, Dwight. And good very good progress report, especially with all the activities in the better film and the CDMO world that you indicated prior quarters. Thank you, Dwight.

Speaker 2

Yes. Thank you for the questions, Steve.

Operator

Your next question for today is from Brent Gaethje, a Private Investor.

Speaker 7

Good morning all. Just a couple of questions. Do you have any revenue projections on the Tilray products?

Speaker 2

Andre, do you want to handle that?

Speaker 3

Yes. I mean, the initial order is for 400 1,000 films. So it's and also the revenue would roughly be anywhere between $200,000 $300,000 but we're expecting some repeat. But for the initial order, that would be the revenue the expected revenue.

Speaker 7

Okay. And then do you all have any projections on Resafilm? I know you all said you all anticipate rapid growth, but I mean do you have any idea what that looks like?

Speaker 3

Yes. I mean, unfortunately, we don't give the guidance, but what we can say is that what the initial forecast was determined by Gensco seems to be very conservative based on our latest discussions. So we're expecting these numbers to be much better, but we still need to wait and see how the launch will go and how the repeat orders will come in. But it could be very decent revenue, but since we don't really give guidance, I don't want to show up numbers here, but it will be several $1,000,000 of revenue for sure. Yes.

Speaker 7

Okay. And then given that with this latest round of financing, once that's completed and the other projects in the fold generating revenue, do you expect that to be the last time you'll need to raise money?

Speaker 3

For technically, if everybody everything goes accordingly for Riza, we'll know a little bit more about BELBUCA or buprenorphine in the short term. It should be, but there will be some expansion in terms of our facility to come at some point because if the volume that we are told that we will have to manufacture for both RIZAFIM and especially buprenorphine, we might be running out of capacity sometimes in 2025 or 2026. So there could be an expansion, but that would probably not be funded through equity. We're looking at different scenario, maybe bank loan, government support, maybe a partnering support. So there are different ways that we're looking at it.

Speaker 3

Most likely, we wouldn't have to raise equity. But that's where we think we are at this point, but it will depend on obviously, on the launch date and the numbers that we've been told. If they meet those numbers, we might be facing that sooner than later.

Speaker 7

Okay. Well, that would be a good thing if that happened. Thank you, guys.

Speaker 2

Absolutely.

Speaker 3

Thank you. Thank you.

Operator

Your next question is from Abraham Shapiro, a private investor.

Speaker 5

Hey, good morning. Congratulations. I'm excited to going forward. I'm still looking for more revenue. A couple of my questions were really asked, but as far as the walking away from Axalta, they held us up for you guys up for a couple of years now.

Speaker 5

Is there legal issues finding a new partner? Are they obligated in any way that they didn't perform their agreement?

Speaker 2

I'll let Tommy comment if I don't fill in the blanks properly, but I do not believe there's any legal obligation on their part. And I know are there any barriers to us finding a new partner. In fact, Axaltis will work with us to help identify the partners. They'll be active in the identification part, but not the selection of the partners.

Speaker 5

Okay. A couple of my questions were already asked. But the in regard to Benefil, when the approval process for veterinary products, is that quicker than the is it FDA or another body? How does that work when we finally get some product?

Speaker 2

The approval process should be slightly quicker. I'll let Nadine comment on whether it's similar to the FDA process, just I believe a bit shorter.

Speaker 6

It is an FDA The requirements are highly similar to what we do for human. So we should expect something very similar to what we see for new drug approval.

Speaker 5

The new drug. So when do we when can we see a better film product getting approved to market?

Speaker 6

That's highly dependent on the partner and the speed at which they run the requirement in terms of clinical and stability studies for the

Speaker 2

shouldn't expect it to happen in the next it's not going to happen in the next 2 years. Okay. It was likely

Speaker 5

2 years. So that's the long term short term, but long term. And what about

Speaker 2

Short term, there's good development revenue in there. But commercial revenue will be beyond 2 years.

Speaker 5

Beyond 2 years, all right. And what about after the Parkinson's study, if that's proved successful, what's the next what do we do next with that?

Speaker 2

Well, as I said, we sit down with the agencies and review the data to understand what's required for the next phase and the clinicals in the next phase. And then like in all likeliness, you would potentially look for a partnership opportunity for the product.

Speaker 5

And the same was with Montelukast, you had good results from we have any partnership potential with that one going on?

Speaker 2

At this point, no, we're sitting waiting for the data. I mean, everybody's

Speaker 5

kind of

Speaker 2

on pins and needles waiting to see what the data pull looks like.

Speaker 5

All right. Best of luck going forward with the rates as well. That's it. All I got.

Speaker 2

We certainly want we certainly when we know what the data looks like, we'll be looking to ensure that everybody understands we've got good news or bad news, one way or the other.

Speaker 5

Again, when is that expected?

Speaker 2

We should get the data by the end of May.

Speaker 5

End of May. All right. Good luck with that. That's all I got. Thank you.

Speaker 3

Thanks, Abe.

Operator

Your next question is a follow-up question from Hugh Kiley.

Speaker 4

Yes. Thank you for taking my follow-up question. With the Tuohy, the initial three products, do you anticipate further orders for them or any of the products under development with Tilray?

Speaker 2

I think Andre specifically said we do anticipate the potential for further follow-up orders on these three products. And as of this date, there's been no advanced conversations on additional products.

Operator

Your next question is from Trevor Lee, a Private Investor.

Speaker 8

Hello. Thanks for taking my call. I was curious if you had any just like results from the raise like how far along you are or if you were going to do the full $20,000,000 before closing it or would you close it earlier kind of what's the update there?

Speaker 2

Andre, you want to take that?

Speaker 3

Yes, thanks. Yes, we started the process and it's a digital offering. So it's mostly happening online And the subscription, everything can be done online. So there's a lot of newsletter, articles that will be published. I mean most of the action or the main spending or exposure will happen in the next, I would say, 2, 3 weeks.

Speaker 3

But there is a possibility to have a rolling closing, which means we won't wait till we reach our objective. Our objective is anywhere between 10,000,000 and 20,000,000. We might close when we reach 2,000,000 or 3,000,000 dollars That's the plan anyway. So we have 12 months, but the plan is to probably get everything done by August, latest September. So but as soon as we have made, let's say, dollars 2,000,000 to $3,000,000 we would make a first closing and then continue the process and then close another one.

Speaker 3

So we can there's no limit as to how many closing we can do.

Speaker 8

Okay. And then

Speaker 1

I guess is there any way

Speaker 5

to provide just more color

Speaker 8

on the CDMO stuff like what kind of some of the potential partnerships and whatnot will entail like is that just packaging their products or is that doing R and D for them or how does that work?

Speaker 2

The CDMO specifically is focused on doing the initial development work with the customers and then keeping the manufacturing rights going forward. So the ones that we're in conversation with are all specific molecules where we will do a the vast majority of the development work. They'll do the registrations and we'll keep the manufacturing rights.

Speaker 8

Okay. And then are there any products from that that might get launched in the next year or 2? Or do you think it's further out than that if some of the deals go through?

Speaker 2

I think they're further out than that. The big deal in the short term for commercial is Riza and the Belbuca. Those are the 2 major focus points on commercial sales. And then the other part is building up the development side of the revenue base that ensures we have manufacturing platform going forward.

Speaker 8

Okay. And then on the manufacturing side, do you have like a relative revenue amount kind of that we could pull in with this before expanding, maybe on like an annual basis?

Speaker 2

I'm going to refer back to Andre's point that we don't give forward speculation on the sales. So at this point, I'm not in a position to actually make that comment.

Speaker 3

Okay. I think that's all I

Speaker 8

had for right now. Thank you.

Operator

Your next question is a follow-up question from Hugh Kiely.

Speaker 4

Last one, I promise you, is any I've got to keep tabbing my questions. Any update of investment houses issuing a research report based upon the good progress you made over the past couple of years and the path forward?

Speaker 2

At this point, I'm not aware of that, Hugh. Maybe Andre is, but I am not. And I think the real focus on management is stick to the knitting, drive the commercial line and fill up the development portfolio for future years of manufacturing. So that's what we're really focused on. But I've not heard that any analyst is going to pick this up yet.

Speaker 4

Okay. All right. Thank you.

Operator

We have reached the end of the question and answer session. And I will now turn the call over to Dwight for closing remarks.

Speaker 2

Yes. Thank you very much for all of the questions. Hopefully, the answers provide a certain amount of guidance to you. This concludes our Q4 and full year 2023 investor call update. I would once again like to thank the entire Inteligenics team for its hard work and dedication, our Board of Directors for their continued support of the management team, and finally our investors for continuing to believe in and supporting us.

Speaker 2

Thank you and goodbye.

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IntelGenx Technologies Q4 2023
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