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Last week I had the pleasure to talk with IntelGenx Technologies' (IGXT.OB) President and Chief Executive Officer, Dr. Horst G. Zerbe. Dr. Zerbe shared with us his insights on IntelGenx's catalysts, pipeline, and commercialization strategies. Prior to founding IntelGenx, Dr. Zerbe served as President of Smartrix Technologies, and as Vice President of R&D at LTS Lohmann Therapy Systems. Dr. Zerbe holds over 40 patents in drug delivery related fields and has published numerous scientific papers in recognized journals.

Ben Yoffe: Mr. Zerbe, I would like to begin with the company's oral thin-film formulation of Rizatriptan. What can you tell us about the product, and how high is it on your priority list?

Zerbe: Rizatriptan is a 5-HT1 agonist used for the treatment of migraine headaches. It was developed by Merck & Co. (MRK) and is available in 5 and 10 mg tablets (Maxalt) and orally disintegrating tablets (Maxalt-MLT®).

IntelGenx has formulated Rizatriptan as an immediate release oral film using its Versafilm technology. IntelGenx's immediate release oral film consists of a rectangular piece of a thin and flexible polymeric film. For a single administration, the film is placed on the tongue and disintegrates in the mouth, following contact with saliva, within one to two minutes. Conveniently, the administration of the oral film does not require water.

In 2012, we successfully completed a bioequivalency study demonstrating that our film is bioequivalent to the reference product Maxalt MLT®. In October, 2012, we conducted a pre-NDA meeting with the FDA. The agency confirmed that it agrees with our proposed filing strategy for a 505(b)(2)NDA submission. We are currently in the final stages of preparing the application and plan to file by the end of Q1/2013.

Based on our current information, IntelGenx's Rizatriptan film is the first oral film product for the treatment of migraine for which a 505(b)(2)NDA will be submitted to FDA. We believe that the product has significant market potential and it is therefore very high on our priority list.

Yoffe: Does the company's Rizatriptan film have any safety, efficacy or cost benefits compared to the Merck's tablets?

Zerbe: As far as safety and efficacy of the product are concerned, by successfully completing a bioequivalency study confirming that the product is bioequivalent to Merck's Maxalt MLT® orally disintegrating tablet, it is assumed that the product is also therapeutically equivalent and that there are no therapeutically relevant differences between the products with regard to safety and efficacy. Regarding product costs, while we have no information regarding the manufacturing costs of Maxalt MLT tablets, we believe that the film product is significantly less expensive due to the fact that generally manufacturing costs of orally disintegrating tablets (ODT's) are generally higher than those of orally disintegrating films. The main reasons are that the manufacturing procedure of ODTs often requires lyophilization of the drug in order to render it rapidly dissolving. In addition, they require a complicated and therefore very expensive packaging system. This typically results in a noticeable price advantage of the film over the ODT.

Yoffe: What can you tell us about the distribution agreement for this product?

Zerbe: In 2010, IntelGenx and Redhill Biopharma (RDHL) entered into a co-development and licensing agreement. Under the terms of the agreement, IntelGenx is responsible for the development of the product, including formulation and clinical development, regulatory affairs, as well as manufacturing scale-up and commercial manufacturing, while Redhill is responsible for funding the project. Redhill is also responsible for identifying a commercialization partner for the product. In return, the parties will share any revenues from royalties and milestone payments at varying rates based upon defined parameters.

Yoffe: Could you be more specific about the defined parameters?

Zerbe: Under the terms of the agreement, we are not at liberty to disclose any financial details of the deal.

Yoffe: I did a little research and found that Redhill disclosed in a recent FORM 20-F, details about your agreement as follow: 1. In case that Rizatriptan film will be marketed by Redhill, royalty payments to IntelGenx will be 20% of net sales. 2. If the product will be marketed by third party sublicensees, Redhill required to make royalty payments to IntelGenx of 60% of the first $2 million of net sublicense fees, and 40% of net sublicensing fees thereafter. 3. If Redhill will bear the regulatory costs in a sublicense arrangement, royalties to IntelGenx will be 20% of net sublicense fees until Redhill will recover these costs, plus 10% interest. If IntelGenx bears such costs, it will get 70% of net sublicense fees.

So, according to your statements, if Redhill will fund the regulatory costs and commercialization partner will be involved, the royalty payments to IntelGenx will be 20% of net sublicense fees until Redhill will recover the regulatory costs, plus 10% interest, and 40% of net sublicensing fees thereafter. Am I correct?

Zerbe: That is correct.

Yoffe: What are your expectations regarding the company's ongoing commercial launch of Forfivo in the U.S.?

Zerbe: Forfivo was recently launched by our commercialization partner Edgemont Pharmaceuticals. It is still too early to clearly describe how the product is performing. However, there are early indications that the co-pay program that Edgemont has introduced is achieving success. We remain confident that Edgemont will reach the projected sales targets for this year.

Yoffe: Do you have plans to market Forfivo in the rest of the world?

Zerbe: Yes, we do. At this time, we focus on those geographic areas and jurisdictions that endorse products that have been approved by the FDA. We are in active negotiations with companies in the MENA (Middle East/North Africa) region. Additionally, we plan to pursue similar partnerships in Central and South America.

Yoffe: Are there any other developments that IntelGenx is currently working on?

Zerbe: We are very aggressively progressing the development of our key pipeline products and recently completed a pilot bioequivalency study for our antihypertensive INT0001 which will allow us to file an ANDA for that product in the second half of 2013. We are also expecting the results from a pilot biostudy for our ED film to be available in February of 2013.

Yoffe: In closing, what is the financial picture for IntelGenx? Does the company have enough cash to get through all of the upcoming steps or will you be looking for additional funding?

Zerbe: Our financial situation is very solid. We expect to be both cash flow positive and profitable at the operational level in 2013 and we therefore do not anticipate raising capital for operational purposes.

IntelGenx Risks: Regulatory agencies may decline to approve the company's regulatory submissions in a timely manner, or may not approve a drug candidate at all. The firm may require substantial funding to advance the clinical progress of its candidates, which could be dilutive to current shareholders. There is competition for the company's drugs from several public and private companies developing pharmaceuticals. Sales of the firm's drugs could depend upon reimbursement from private, as well as public, reimbursement agencies.

Moreover, small cap stocks, especially those with market caps under $100 million are consider to be risky investments.

Source: IntelGenx CEO Provides Insight Into The Company's Catalysts