IntelGenx Technologies Corp. (PNK:IGXT) Q4 2023 Earnings Call Transcript March 21, 2024

IntelGenx Technologies Corp. isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Greetings. Welcome to the IntelGenx Fourth Quarter and Full Year 2023 Results Conference Call. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to your host, Stephen Kilmer, Investor Relations at IntelGenx.

Stephen Kilmer: Good morning, everyone, and thank you for joining us on today's call. With me on the line are Dwight Gorham, IntelGenx's CEO; André Godin, our President and CFO; Dr. 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. 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.

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. Dwight?

Dwight Gorham: Thank you, Steve. Good morning, everyone, and thank you for joining us for the IntelGenx Fourth Quarter 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. I will now update you on our key programs, beginning with RIZAPORT. During the third quarter of 2023, we received the first purchase order for the RIZAFILM, 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 in the pharmaceutical oral film. We commenced production in December 2023 and expect to ship the ordered RIZAFILM product to Gensco in Q2 2024 for immediate launch to market. Unfortunately, as of the end of 2023, we saw no appreciable progress by Exeltis, our partner for RIZAPORT in Spain. Consequently, by mutual agreement with Exeltis, 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 Xiromed, 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. 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 CBD20, THC10 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 VetaFilm-based drug product.

The license agreement will give Covenant Animal Health exclusive rights to exploit the product in the field for nonhuman 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 eventually prove to be an important revenue inflection point for our overall VetaFilm business. Covenant is a well-recognized player in this space, and as such, the partnership should help open up doors to several additional commercial opportunities for proprietary VetaFilm 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 VetaFilm proof-of-concept study, which was conducted through a research collaboration with UPEI, one 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 say, there are a few prescription medications that dog and cat will legally accept and force 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.

The purpose of the research collaboration with UPEI was to assess palatability, owner-perceived acceptability and ease of administration of the VetaFilm to healthy dogs and cats. Specifically, the study evaluated one, acceptance rate of various VetaFilm placebo formulations in dogs and cats at first exposure; two, preference between flavors of VetaFilm placebo formulations in dogs and cats; three, changes in accepted rates over longer periods; and four, owner perception of ease of administration and acceptance and other behaviors associated with VetaFilm placebo formulations. Overall, 100% of dog owners and 67% of cat owners felt the administration of VetaFilm's oral films was very easy or easy and 95% of dog owners and 82% of cat orders identified VetaFilm as the preferred method of medication administration.

A scientist in the lab, researching the development of biopharmaceutical monoclonal antibody drugs.

Moving on to R&D. We have completed dosing in the BUENA Montelukast VersaFilm IIa clinical trial in patients with mild-to-moderate Alzheimer's disease this month, and expect to report initial trial results next quarter. Additionally, having now received approvals from the Swedish Medical Products Agency, the Swedish Ethical Review Authority and the regional biobank center to conduct a MONTPARK Montelukast VersaFilm Phase II 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 multicentered, randomized, double-blinded placebo trial, which is designed to assess Montelukast's VersaFilm as an alternative to the tablet for of Montelukast will be conducted at the Karolinska University Hospital in collaboration with principal investigator, Dr. Per Svenningsson who will respond to the study through a Swedish Research Council grant worth approximately USD 2 million.

Finally, earlier this month, the Phase Ib trial for our oral transmucosal film formulation of DMT was initiated. The Phase Ib study is designed to evaluate the relative safety, tolerability, pharmacokinetics and pharmacodynamics of an optimized film formulation compared to intravenous DMT. Top line results for the Phase Ib study are expected in the second half of this year. With that, I would like to turn the call over to Andre for a review of our financial results. Andre?

André Godin : Thank you, Dwight. Good morning, everyone. As Dwight mentioned, I'll take a few minutes to discuss the company's financial performance for the fourth quarter as well as the full year -- fiscal year ended December 31, 2023. For the fourth 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&D revenue. Our operating costs and expenses were $2.4 million for Q4 2023 versus $2.7 million for the corresponding 3-month period of 2022. For Q4 2023, the company had an operating loss of $2 million, down from $2.5 million in Q4 2022 as well as adjusted EBITDA, which was negative $1.7 million for Q4 2023, a similar improvement over negative $2.3 million for Q4 2022.

Our net comprehensive loss improved to $1.7 million or $0.01 on a basic and diluted per share basis for Q4 2023 compared to $2.3 million or $0.01 per basic and diluted share for the comparable period of 2022. For the full year of 2023, total revenue amounted to $1.039 million compared to $950,000 for 2022. The full year operating cost were $10.5 million for 2023 versus $10.4 million for 2022. For the full year 2023, the company had an operating loss of $9.5 million compared to an operating loss of $9.4 million for the comparable period of 2022. Net comprehensive loss was $10.1 million or $0.06 per basic and diluted shares for 2023 compared to $11.5 million or $0.07 per basic and diluted share for the comparable period of 2022, an improvement of $1.4 million.

As of December 31, 2023, the company's cash and short-term investments totaled $2.3 million. Subsequent to the year-end, IntelGenx announced the launch of a Reg A offering of up to 2 million shares of non-traded Series A convertible cumulative preferred stock at an offering price of $10 per share or a maximum offering amount of $20 million. As we've discussed in the past, we're always trying to balance our financing needs with the goal of limiting current shareholder dilution 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.S. commercial launch of RIZAFILM next quarter, we will be entering into a phase of anticipated rapid growth. This rate 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.

Dwight Gorham: 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 one, the launch of the RIZAFILM in the USA; two, finding a new commercial partner for the RIZAPORT in Spain and additional markets in Europe; three, reporting initial results of the Phase II BUENA Montelukast VersaFilm trial in moderate-to-mild Alzheimer's disease; four, initiating subject dosing in the MONTPARK Montelukast VersaFilm Phase II clinical trial in patients with Parkinson's disease; and five, 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 2024, and our new business development efforts are on their way to accomplishing this goal. 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&A. Thank you.

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