New Aegis Capital Update TGT $3 ...
IntelGenx: Looking Towards A Pivotal Year Ahead
May 20, 2013
Forfivo™ Traction Expected To Accelerate. We note that Forfivo™ has now been available in the U.S. for roughly six months, and that IntelGenx's partner Edgemont Pharmaceuticals appears to have dealt with most of the initial snags that impacted the launch of the drug. Accordingly, therefore, we anticipate meaningful acceleration in Forfivo™ prescription volumes in the coming months. While we do not expect the drug to become a massive seller, we note that even a relatively modest revenue base would likely have substantial impact on IntelGenx's bottom line, and should be sufficient to drive the company towards profitability. We note that IntelGenx continues to exhibit a cost-effective operational approach, burning roughly $2mm or less per year. We reiterate our Buy rating and 18-month price target of $3.00 per share on IGXT.
Rizatriptan 505(b)(2) Application Filed. In March 2013, IntelGenx reported that it had filed for approval of an oral film-based proprietary formulation of rizatriptan, a well-known anti-migraine drug belonging to the triptan class. Rizatriptan, which was originally developed and commercialized by Merck & Co. (MRK/NYSE, Not Rated) under the trade name Maxalt, had sales of $638mm in 2012. The patent protection on Maxalt has now expired. We believe that, even in the face of generic competition, it should be possible for IntelGenx's oral film formulation to eke out a solid niche in the migraine market, particularly as the company's delivery approach provides substantial advantages from an absorbability perspective.
Management Transition Announced. IntelGenx recently appointed Dr. Rajiv Khosla, a widely-respected industry veteran who previously spent several years at Biovail Corporation - now Valeant Pharmaceuticals International (VRX/NYSE, Buy) - as Chief Scientific Officer and Chief Operating Officer. Dr. Khosla is also slated to assume the post of CEO effective January 2014. Horst Zerbe, the company's founder and current CEO, is expected to stay on as Chairman of the Board of Directors and is slated to continue to provide expertise on formulation, drug manufacturing and R&D. From our perspective, the appointment of Dr. Khosla is a solid step forward for IntelGenx and should enable the firm to operate more aggressively from an out-licensing and partnership standpoint.
Additional Catalysts Expected Near-Term. We believe that 2013 is likely to be a watershed year for IntelGenx because this is the first time that the company is in position to reap rewards from a marketed product - Forfivo - which is in full ramp mode, while simultaneously filing other drug candidates for approval with the FDA. In our view, even one or two regulatory submissions should catch the eye of discerning investors, the majority of whom we continue to believe are unaware of the potential inherent in IntelGenx's diversified product candidate portfolio and capital-efficient business model.