IntelGenx Technologies Corp. (PNK:IGXT) Q4 2022 Earnings Call Transcript

IntelGenx Technologies Corp. (PNK:IGXT) Q4 2022 Earnings Call Transcript March 29, 2023

Operator: Greetings and welcome to the IntelGenx Fourth Quarter and Full Year 2022 Financial Results Conference Call. At this time all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. Please note this conference is being recorded. I will now turn the conference over to your host, Stephen Kilmer, Investor Relations at IntelGenx. You may begin.

Stephen Kilmer: Thank you. Good afternoon everyone, and thank you for joining us on today’s call. With me on the line are Dr. Horst Zerbe, IntelGenx’s CEO; Andre Godin, our President and CFO; Dr. David Kideckel, the Company’s Head of Corporate Development and Strategic Alliances; Dr. Frank Pietrantonio, our Director of Clinical Research; and Tommy Kenny, our VP, Legal Affairs and Intellectual Property 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 contains 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’d now like to turn the call over to Dr. Zerbe. Horst?

Horst Zerbe: Thank you, Stephen. Good afternoon everyone, and thank you for joining us for the IntelGenx fourth quarter and full year 2022 conference call. On today’s call, I will provide the corporate update and discuss the progress we’ve made on our key pipeline projects. Then Andre will review our financial results. Following that, we will open up the line for your questions. Before launching into an update, I would like to take this opportunity to welcome David Kideckel to our team and to his inaugural IntelGenx investor call. David succeeds Dana Matzen, who recently left IntelGenx to pursue another opportunity. David has nearly 20 years of combined industry and capital markets experience, most recently managing his own advisory group.

Before that, he was a Managing Director, Senior Institutional Equity Research Analyst at ATB Capital Markets. David’s industry experience spans several senior healthcare and biotechnology executive roles, including Johnson & Johnson Inc. and Alexion Pharmaceutical. David has a PhD in neuroscience from the University of Toronto. While he is just getting up to speed, David has volunteered to join us today on the call and he will be available to participate in the Q&A session following our introductory remarks. With that, I will now update you on our key programs. First on the ATAI partnership. As many of you will recall, in September, we shipped a clinical trial batch of our previously undisclosed candidate Buccal VLS-01 to ATAI. VLS-01 is a pharmaceutical grade psychedelic Buccal film containing a synthetic form of an N,N-dimethyltryptamine, or DMT.

ATAI is developing the product as a novel therapy for treatment resistant depression, in combination with its digital therapeutic, designed to provide contextual mindset and setting support to patients prior to dosing. In October, ATAI announced that it had dosed the first subject in its Phase 1 clinical trial of Buccal VLS-01, the first ever in-human clinical study, evaluating an oral thin film psychedelic drug candidate with top line results expected in the first half of 2023. The PK study was delayed due to flooding in New Zealand and is still ongoing. ATAI is also evaluating potential new candidates, which obviously I can’t disclose yet. In €“ no, sorry, moving on to RIZAPORT now. In November, the FDA accepted for review of Class 2 response to the 2020 Complete Response Letter for our 505(b)(2) NDA for RIZAFILM.

We believe the Class 2 response provided all of the additional chemistry manufacturing controls information that the FDA requires. FDA has assigned a PDUFA goal date of April 17, 2023 for completion of the review of the RIZAFILM NDA. We look forward to their decision and to hopefully making RIZAFILM available to acute migraine patients in the United States. Regarding the OUS an update there, recently we met with Exeltis, our partner for RIZAPORT in Spain. They reported great feedback from prescribing doctors and patients, but have been struggling with significant product substitution at the pharmacy level. They are now working on a strategy to overcome the loss in sales and Exeltis is waiting for regulatory approval to implement that new strategy, which is basically revolving around modifying the packaging format, which would then make Genx substitution no longer possible.

In January, we entered into an exclusive supply agreement for RIZAPORT with ARWAN Pharmaceuticals Industries Lebanon s.a.l. in various countries in the MENA region. I will not mention all these countries, but I can tell it’s a total of 22 countries spanning that region. ARWAN knows the MENA marketplace intimately and has successful track record. We’re looking forward to working with them. Moving on to Tadalafil. As we reported last quarter, there was a slight delay as our partner Aquestive has encountered some API related issues, or Tadalafil. However, the R&D teams from both companies worked diligently and formed a task force to address the issue. We believe that we have now solved the API €“ this API issue, and we are preparing for manufacturing of the clinical batch.

Moving on to cannabis films, we are planning a PK study to demonstrate the superiority of our THC sublingual film over conventional applications like gummy bears, and so on. We also recently received a U.S. patent for our novel cannabis-emulsion based film technology. Also, words on Montelukast, while enrollment in the ongoing Phase 2a BUENA clinical trial in patients with mild-to-moderate Alzheimer’s disease, or AD, is continuing, we are also now expanding the Montelukast repurposing program to include another major neurodegenerative disorder, Parkinson’s disease or PD. We believe and there is sufficient scientific evidence that Montelukast VersaFilm has the potential to be disease modifying in both AD and PD. In February, we announced a research collaboration with Dr. Per Svenningsson of the Karolinska Institute, to plan and conduct a multicentre, randomized, double-blind, placebo-controlled clinical study to investigate the use of Montelukast VersaFilm for the treatment of PD.

Dr. Svenningsson will serve as the principal investigator for the plan study and will sponsor it through a grant awarded by the Swedish Research Council to grant in excess of $2 million. IntelGenx will supply Dr. Svenningsson with both active and placebo films to be used in the 18 months treatment regimen for study participants. On completion of the study, IntelGenx will retain the intellectual property rights and use the findings to further develop this program for PD treatment. We currently expect the study to commence in Q3 2023 and will provide more details on its design at that time. Now, some comments on Xiromed. In October, we announced that Buprenorphine Buccal Film received an FDA Generic Drug User Fee Act or GDUFA date of April 28, 2023.

We partner with Chemo, part of the Insud Pharma Group on the development of Buprenorphine Buccal Film in September 2016 and co-developed the candidate’s ANDA that was filed through Xiromed and is currently under review by the FDA. Buprenorphine Buccal Film is a generic version of Belbuca, an opioid that is used to manage pain severe enough to require daily around the clock, long-term treatment with an opioid when other pain treatments are inadequate. Belbuca was approved by the FDA in 2015 and is applied to the oral or buccal mucosa every 12 hours. Buprenorphine Buccal Film incorporates our VersaFilm technology in a novel formulation and is designed to be a bioequivalent, lower cost alternative for patients. According to IMS Health, global annual sales of Belbuca were 315 million as of July, 2022.

We are looking forward to the FDA’s decision and assuming a positive decision by the FDA. We’re looking forward to the commercialization of Buprenorphine Buccal Film as soon as possible. Last but not least animal health. In December, we announced a research collaboration with the University of Prince Edward Island PI to assess palatability, owner perceived acceptability and ease of administration of our VetaFilm platform in dogs and cats. The University of Prince Island Edward is one of North America’s leading veterinary universities. So, we are very much looking forward to the results of this assessment as we continue to advance our drug delivery technology into the animal health space. Earlier in the fourth quarter, we entered into a new VetaFilm feasibility and development agreement with an undisclosed animal health company for a VetaFilm-based oral film formulation containing CBD for use in companion animals.

The results from the CBD study are expected in Q2. And with that, I would now like to turn the call over to Andre for a review of our financial results. Andre?

Photo by National Cancer Institute on Unsplash

Andre Godin: Thank you, Horst. Good afternoon everyone. As Horst mentioned, I’ll take a few minutes to discuss the company’s financial performance for the fourth quarter as well as the full fiscal year ended December 31, 2022. For the fourth quarter, the total revenue amounted to $273,000 compared to $494,000 the same period last year. The change is mainly attributable to decrease in revenue from licensing agreement of $249,000, R&D revenue of $43,000 and product revenue of $36,000. That was offset partially by an increase in royalty on product sales of $7,000. The main difference comes from the one time licensing fee we received last year for Tadalafil. Operating costs and expenses were $2.7 million for Q4 2022 versus for the corresponding three-month period of 2021, a slight year-over-year reduction.

For Q4 2022, the company had an operating loss of $2.5 million, essentially in Q4 2021, as well as adjusted EBITDA, which was negative $2.3 million for Q4 2022, again, essentially unchanged from Q4 2021. Our net comprehensive loss was improved to $2.3 million or $0.01 on a basic and diluted per share basis for Q4 2022, compared to a net comprehensive loss of $2.9 million or $0.02 per share for the comparable period of 2021. For the full year total revenue for the 12-month amounted to $1 million compared to $1.5 million in 2021. Again, the main difference coming from the one time licensing fee we received last year for Tadalafil. The full year operating cost were $10.4 million for 2022 versus $9.5 million for 2021. For the full year 2022, the company had an operating loss of $9.4 million compared to an operating loss of $8 million for the comparable period of 2021.

Net comprehensive loss was $11.6 million or $0.07 €“ per basic and diluted share for a 12 months of 2022 compared to a net comprehensive loss of $9.8 million or again, $0.07 per basic and diluted share for the comparable period of 2021. As of December 31, 2021 €“ 2022, sorry, the company’s cash and short term investments totaled $2.5 million, which does not include the $3 million secured loan granted to IntelGenx by atai that we received in January of 2023, nor the 1 million in Canadian dollar in gross proceed from the private placement offering of the convertible note which we closed just earlier this month. I will turn the call back to Dr. Zerbe. Horst?

Horst Zerbe: Yes, thank you, Andre. In closing, I’d like to once again recognize our team for executing on our long-term strategy. And with that, I will now turn the call over for questions. I’d like to remind you that our forward-looking statements apply to both our prepared remarks and the following QA. Thank you.

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Q&A Session

Operator: Thank you. At this time, we will be conducting a question-and-answer session. The first question is coming from , who is a Private Investor. Brent, your line is live.

Unidentified Analyst: Good afternoon, guys. We got a couple questions. So if either of these products are approved later this in April, are you all ready for production? How soon would production start?

Horst Zerbe: The current plan of our commercialization partners is to commence with the launch preparation, meaning manufacturing of validation batches later in the year. In the case of buprenorphine, I can tell you that the launch timeline is driven by litigation €“ patent for litigation. If you want more information on that, and to the extent that that is a public domain, Tommy can certainly comment on that. And our partner for the RIZAFILM also targets for manufacturing of validation batches, which would be the first saleable product for later in the year. I think Q3 or probably Q4 and both would then be lined up for actual commercialization in early 2024.

Unidentified Analyst: Okay. So it sounds like you’re still a ways off from revenues, any significant revenues. I mean, how long can the company survive without any revenues? I mean, do you plan to just keep diluting or what?

Horst Zerbe: I think what have to do with it? Andre, do you want to comment?

Andre Godin: Yes, I think that’s €“ it’s not defined I mean, or obviously just mentioned that what the partners are planning to do. But obviously when you €“ after we get these approval, it would be much clearer as to when both launch could take place. We’re expecting to get obviously some momentum with those approvals. And we have other things in the pipeline, so at some point where we might have to raise money but at a much higher evaluation as we are presently. So that’s why we were very conservative with the offering we did earlier this month. Those were investors that we’re already shareholders of the company. So we limited that offering. But we’re expecting to have great momentum and probably raise money to secure all the necessary step to be able to launch commercially these two products. But it could be Q3, Q4, Q1, but it will be, I guess, a little bit clearer when we get these approvals.

Unidentified Analyst: Okay. Thank you, guys.

Operator: Welcome. Thank you. The next question is coming from . Steve is a Private Investor. Steve, your line is live.

Unidentified Analyst: Hello. April 17, April 28 dates with PDUFA, doesn’t come through, what happens next? What’s the game plan there?

Stephen Kilmer: Horst, you want to comment or?

Horst Zerbe: Yes, I can certainly comment. I mean, that’s a very theoretical question. Our game plan depends on what the response is. At this point, we assume that we will €“ that the products will be approved should FDA require further information, then we will deal with that. That’s really all I can say at the moment. I simply, nobody knows at this point what FDA’s response will be at or around the PDUFA dates. We are in constant contact with FDA. They come regularly with requests, which indicates to us that they’re progressing well with the review. And at this point, we have not seen any showstoppers, but that’s really all I can say there. I cannot speculate on the outcome.

Unidentified Analyst: Okay. Because in the past, you’ve talked about this and we get dates set, and then next thing it’s more paperwork. It didn’t get this, it didn’t get that, in two public offerings there. One of them was five years ago, and my warrants expired, so I lost money on that. And now the second one ends at the end of this year. And I’m wondering what’s going to happen come April 17, 28, if we don’t get the approval? That was my question.

Horst Zerbe: No, I understand that we are as anxious as everybody else to get the approved, and we worked really hard to submit satisfactory responses to FDA, that’s all I can say.

Unidentified Analyst: Okay. And now, Andre just the last question, was you’re going to do another offering soon? Is that, Andre?

Andre Godin: Yes, it will depend on €“ that’s probably the plan, yes. But it will depend on the valuation and the terms that we might be able to get after April. I mean, we need, if we get these approval like we think we will, we will need to build inventory, we’ll need to get ready to get commercial ready. So there’s some investment there, and until we actually get the benefit from the product launch, it will take a few months. So that’s why we’ll need to fund the company, but I’m expecting the terms to be much better than the previous raise. And €“ but as Horst mentioned, we don’t know the outcome, but we’ll soon find out.

Unidentified Analyst: All right. Okay. Thank you.

Horst Zerbe: Thank you.

Andre Godin: Thank you. You’re welcome.