Back in August 2016, we alerted our readers to a potential winner in the biotechnology space with this piece, focused on a biotech microcap called IntelGenx Technologies Corp (OTCMKTS:IGXT). At the time, the company traded for around $0.64 a share. A couple of months later, we reinforced our previous coverage with this piece, suggesting that a break was on the cards and that, with a spate of catalysts set to hit press throughout 2017, an exposure at then-current prices could pay off as the year matured.
It took until the start of June, but our thesis has finally been validated.
At the end of May, IntelGenx went for $0.70. By the start of this week, the company had risen to $1.10 a piece. For our readers that took a position on the back of our first highlighting of this one, that’s a nice 60% appreciation.
As things stand, however, we think this one is really just starting to come into its own. The next couple of months should bring with them a spate of fresh catalysts, some of which have rolled over from the previous period, but others that are new inputs, and each of these has the potential to compound the action we saw throughout June and continue to drive this one skyward.
Further, at current prices, the company is trading at a discount on its early week highs. As such, not only might this one be a nice long-term upside appreciation exposure but, right now, it’s available at a discount ahead of a return to the run.
So what are the catalysts we are watching for?
Before we get into the catalysts, it’s important to understand the technology that underpins this company’s drug development platform. It’s not that complicated – essentially, IntelGenx takes already approved drugs and converts them into a differentiated administration formulation that allows for sublingual administration by way of a dissolvable film. The patient puts the film under their tongue, it dissolves, the active compound is absorbed and systemically distributed.
So, our first catalyst is rooted in the application of this alternative administration method to a drug called tadalafil, which is indicated for the treatment of erectile dysfunction (It is also indicated for pulmonary hypertension, but right now, IntelGenx is focusing on the erectile dysfunction population). Management has completed manufacture of submission batches and is about to wrap up the bioanalytical portion of a pivotal pilot study. As stated in the most recent conference call (available here), successful completion will allow for a 505(b)(2) NDA during (and to quote) June or July.
Both the audited results from the study (which should hit press any day now) and the submission (likely late July) have the potential to inject some upside momentum into the stock and get it moving towards the $1.5 region.
The second catalyst derives from a non-Orange Book patent case associated with the technology as applied to an opioid abuse indication. Two patent cases have already been won and the non-Orange Book case is set to resolve this month. We also just got the announcement that an Orange Book eligible patent has been granted a notice of allowance, suggesting the former should rule favorably. Not confirmed, of course, but far from an unreasonable conclusion.
Just as with the tadalafil program, a favorable outcome for the aforementioned will boost IntelGenx’s market capitalization near term.
Finally, we’ve got a phase II proof of concept study set to initiate next month. This was initially slated for the first quarter but has been delayed a little, and in the most recent conference call, management stated that June is the target but it may bleed into July. It’s now looking like the latter is likely (since we’re at the end of June and we’ve had no new updates), but the delay isn’t all that important. It’s a Montelukast film product trial, a product that already performed well in early stage trials, and that will seek to underpin an application for approval in a degenerative brain disease indication – a billion dollar market with an incredible degree of unmet need right now.
Cash at end March came in at just shy of $4 million, which should last through to mid-2018 at the earliest, removing any near-term dilution risk on an exposure at current rates.
We will be updating our subscribers as soon as we know more. For the latest updates on IGXT, sign up below!
Image courtesy of CIRM via Flickr
Disclosure: We have no position in IGXT and have not been compensated for this article.