Aegis starts IntelGenx at buy; PT $3

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Aegis Capital initiated coverage of IntelGenx (OTCQX:IGXT) with a “buy” rating and $3 price target. The stock closed at 88 cents on Jan. 26.

IntelGenx has more than a dozen generic oral film and oral-dissolving tablet reformulations of existing drugs, including two drug re-purposing candidates, in development. The company does not intend to commercialize its drugs and has established partnerships for many of its pipeline assets.

In addition, IntelGenx's oral film manufacturing capabilities should allow the company to earn a reasonable gross margin (40%+) when supplying product to its partners, writes analyst Ben Haynor.

“In short, IntelGenx has been successful in securing partners who pay for the development and commercialization in exchange for having access to the company's proprietary drug delivery technologies,” he added.

Mr. Haynor said one of IntelGenx’s exciting assets, with a blockbuster potential, is Montelukast VersaFilm for the treatment of Alzheimer's disease. Merck originally developed montelukast for the treatment of asthma and allergies. IntelGenx is repurposing montelukast as a therapeutic to treat neurodegenerative diseases by re-formulating the drug into an oral film-based product.

In early studies of Montelukast VersaFilm, IntelGenx has shown that the bioavailability of the drug increased by 52% and crosses the blood-brain barrier. The company recently initiated a Phase 2a study in Canada to evaluate safety, tolerability, and efficacy over 26 weeks of daily dosing. IntelGenx expects interim results this summer and full results in the second half of 2018.

Mr. Haynor said 2018 should be an exciting year for IntelGenx, with pending FDA decisions for two oral film reformulations of branded drugs: tadalafil (Eli Lilly’s Cialis) for which the company has an exclusive license until April 2020 and Rizaport (Merck’s Maxalt-MLT), as well as the Montelukast VersaFilm readout.