Impressive development programs, partnerships and product launch prep appear to make IntelGenX a solid bet at these prices Print E-mail
By M.E.Garza   
Friday, 23 March 2012 06:00
Shares of IntelGenX Corporation (OTCBB: IGXT) were trading just under $.50 per share last November. That was the first time we told our readers the relatively under-followed story a micro-cap biotech with a pending FDA decision that could become a game changer for the company focused on improving existing medications by incorporating proprietary, advanced controlled-release technologies.

Not long after our coverage, IntelGenx announced that the U.S. Food and Drug Administration had indeed approved IntelGenx' lead product, CPI-300, for patients with Depressive Disorder. CPI-300 is a high-strength formulation of Bupropion hydrochloride (HCl), the active ingredient in Wellbutrin XL. CPI-300 is the only single dose 450 mg formulation of Bupropion HCl approved by the FDA.  The stock eventually hit $.74 and they have since announced a co-development and commercialization agreement with Par Pharmaceutical (NYSE:PRX) and exclusive agreement with Edgemont Pharmaceuticals, LLC (Edgemont) for the commercialization of IntelGenx' lead product CPI-300 in the United States (U.S.). Under the terms of the agreement, Edgemont obtained certain exclusive rights to market and sell CPI-300 in the U.S. In exchange, IntelGenx recieved a $1.0 million upfront payment and launch related milestones totalling up to $4.0 million and will be eligible for additional milestones upon achieving certain sales and exclusivity targets of up to a further $23.5 million.

In several ways, the company has now been greatly de-risked for investors, yet shares are once again trading near the bottom half of a technical trading pattern (-54.25 %  from the stock's 52 week high of $1.00) which appears to keep share prices within a clearly defined price channel and therefore call attention to us as both a good short and long term trade.

Dr. Horst G. Zerbe is the Chief Executive Officer and President of IntelGenx and has more than 20 years experience in the pharmaceutical industry. Prior to founding the company, he served as the president of Smartrix Technologies Inc. in Montreal, and as Vice President of R&D at LTS Lohmann Therapy Systems in West Caldwell, NJ. He holds over 40 patents in drug delivery related fields and has published numerous scientific papers in recognized journals.

We caught up with Dr. Zerbe to find out if investors are missing something when it comes to understanding a company with several strong drug candidates in their pipeline with planned launches in the not too distant future.

BioMedReports: A lot has happened at IntelGenx since we last spoke early in November, perhaps give us a quick recap of the past months for the company.

Dr. Horst G. Zerbe: A lot has indeed happened since we last spoke.  In mid-November IntelGenx received full and unconditional approval for our lead product CPI-300, a high dose Bupropion XL product for the treatment of major depressive disorder.  This approval makes CPI-300 the only single tablet high dose Bupropion XL product available on the U.S, market.  We then announced last month that we entered into a licensing agreement with Edgemont Pharmaceuticals for the commercialization of CPI-300.  We anticipate the product will be launched by Edgemont this summer.
In addition to all our CPI-300 news, we also announced in December that we signed a co-development and licensing agreement with Par Pharmaceuticals.  While the company has the contractual obligation not to disclose any technical details regarding the project, such as drug, technology, sales potential, nor to disclose any terms of the deal, we believe that this product, once on the market, has the potential to become one of the biggest revenue generators for the company.

BioMedReports: Why did you choose to license CPI-300 to Edgemont Pharmaceuticals?

Dr. Horst G. Zerbe: We had serious negotiations with several interested companies, both specialty pharma and generic companies, and we had several attractive term sheets on the table. We felt that Edgemont’s terms were very attractive and offered us the best overall opportunity to maximize the potential of CPI-300.  The financial terms of Edgemont’s offer included $5 million in signing and launch related milestone payments, $23.5 million of sales and exclusivity related milestone payments, and a tiered double-digit royalty on net sales. Moreover, we were very impressed by the determination and experience of Edgemont’s management. The CEO and founder, Doug Saltel, used to be in charge of Novartis’ $2.3bn neurology business in Europe and has an impressive track record of successful product launches in the neurology space. Edgemont is focusing on the neurology market and has just launched a high dose Prozac product. Finally, the company is solidly financed and backed by an experienced board which, amongst others, includes two former Kos executives.   

BioMedReports: Now that you have a commercial partner in place, when do you think CPI-300 will be launched?

Dr. Horst G. Zerbe: Launch preparations are well underway at our contract manufacturer, Pillar5, and are on track for a July 2012 product launch.

BioMedReports: Edgemont has a board member, Dr. Robert Zerbe, is he of any relation to you?

Dr. Horst G. Zerbe: That question has been asked a few times. I would like to emphasize that I am not related to Dr. Robert Zerbe.  By sheer coincidence, I met him once in the mid-nineties at a joint FDA/AAPS event where I presented and he attended as a regular symposium attendee. He briefly introduced himself to me and that is the only contact we ever had.

BioMedReports: With CPI-300 licensed and soon to be launched, what pipeline products should investors be focused on?

Dr. Horst G. Zerbe:
The next product that will be ready for FDA submission is our migraine film. We just completed the manufacturing of the pivotal batches and will start the pivotal bioequivalency study in April. Assuming a positive outcome of the study, the 505(b)(2)NDA will be submitted in Q1/2013.

We are also making very good progress with our erectile dysfunction film. The product will be scaled up in Q3, 2012 and we expect to file the 505(b)(2) NDA application in the second half of 2013.

Our antihypertensive tablet, which involves our VersaTab technology, is currently in the manufacturing scale up phase, and we expect to submit the ANDA in 2013.

Finally, our buprenorphine/THC combination for the treatment of various pain indications is well advanced. We are in negotiations with potential partners for a development and licensing deal, and anticipate that Phase II clinical testing could commence as early as the fourth quarter of 2012.

BioMedReports: Why was there such minimal information provided on the Par Pharmaceuticals collaboration?

Dr. Horst G. Zerbe: The cooperation with Par is for a generic product. A critical parameter for a generic company to be first to file an ANDA is to be extremely protective of any and all technical and business information that might allow their competitors to speculate  on the product they are working on. That is the reason why Par asked us not to disclose any technical and business details in our press release. Par has an impressive track record of being first to file. In fact, they have the highest success rate of all generic companies in the US for being the first to file an ANDA.   

BioMedReports: How strong is the company financially?

Dr. Horst G. Zerbe: Our balance sheet is very strong. We currently have more than $4 million cash on hand with no debt on the books, and we expect further cash inflows from the CPI-300 deal in 2012, as well as from other deals that we are currently negotiating.

BioMedReports: What are the biggest challenges ahead for the company?

Dr. Horst G. Zerbe: I see two challenges; On the technical side, we need to gain full control over our supply chain. Our intellectual property and technical know-how is our strongest asset and we must make certain that we have full control over who can access our manufacturing technology. We plan to address this within the next 12 to 18 months.

On the corporate side, we need to improve the flow of information to investors, both institutional and – even more importantly – retail investors. We have noticed that retail investors receive very little information about the company, its deal flow, financial situation, etc. which causes uncertainty and results in a lot of selling, particularly and ironically often on the announcement of good news. We have identified the problem and are working on solutions to fix it.

BioMedReports: As we look at 2012, what are some of the key milestones and news items that investors should be looking out for?

Dr. Horst G. Zerbe: Although not in chronological order, the upcoming key milestones are the launch of CPI-300 in a few months’ time; the announcement of a commercialization agreement for our erectile dysfunction film; the announcement of a development cooperation for our pain product involving our mucoadhesive tablet technology, and the announcement of a co-development and licensing deal for our oral films for animal health applications.

BioMedReports: What is the one key value driver that you hope investors understand about IGXT?

Dr. Horst G. Zerbe: This has always been, and will continue to be, our strong product pipeline. We currently have 11 active development programs in place, most of them involving a 505(b)(2) regulatory strategy. This means that the products are sufficiently de-risked and have a high probability of making it to the market. We are therefore expecting a continuous output of attractive, high-value products to the market that will ensure significant and growing profits over the coming years.

Disclosure: None

"Featured Content" profiles are meant to provide awareness of these companies to investors in the small-cap and growth equity community and should not in any way come across as a recommendation to buy, sell or hold these securities. BiomedReports is not paid or compensated by newswires to disseminate or report news and developments about publicly traded companies, but may from time to time receive compensation for advertising, data, analytics and investor relation services from various entities and firms. Full disclosures should be read in the 'About Us Section'.

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