Maxim starts IntelGenx at buy; PT $3

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Maxim Group initiated coverage of IntelGenx (OTCQX:IGXT; TSXV:IGX) with a “buy” rating and price target of $3. The stock closed at 78 cents on June 26.

Analyst Jason McCarthy writes that the company’s VersaFilm is a thin film drug delivery platform for branded generics, generics and repurposed drugs that allows for more rapid drug absorption, improved bioavailability, abuse resistance and patient convenience. 

“Between 2019 and 2020, four products are expected to launch: Rizaport (migraine), Cialis (erectile dysfunction), Loxapine (schizophrenia/bipolar disorder) and Suboxone (opioid dependence),” he added. 

Mr. McCarthy said that with pharma partnerships and combined markets that generate $15-billion annually, only a 1% share could mean $18-million to $20-million in royalties in 2020. IntelGenx also has multiple other products are in development using a controlled-release oral tablet, Adversa. 

The company also is repurposing Singulair, or montelukast. The asthma drug is being formulated with VersaFilm for the treatment of neurodegenerative brain diseases, with a Phase 2a study underway in Alzheimer's disease (AD). 

Pre-clinical studies have shown VersaFilm montelukast crosses into the brain, regenerates neurons, restores blood vessel integrity and improves learning/memory/function in aged rats versus controls. IntelGenx initiated its aforementioned Phase 2a study in 70 patients with mild-to-moderate AD in January 2018.

Mr. McCarthy said the unmet need in AD, in addition to a lack of approved drugs, is also drug delivery because many patients with severe AD cannot swallow. 

“VersaFilm is a disruptive technology for drug delivery and with pharma partners, positions IntelGenx to generate significant royalty revenue as new products launch,” he added. “With four products coming to market over the next few years and a pipeline of VersaFilm and Adversa candidates, we see catalysts to drive a higher valuation.”

Michelle Carr