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Maxim Group initiates coverage of IntelGenx Technologies with Buy recommendation and US$3 price target

The analysts viewed the Canadian company’s VersaFilm oral film drug delivery platform as 'disruptive' for the pharma industry
VersaFilm oral film technology
The analysts said pharma partnerships positioned IntelGenx to generate “significant" royalty revenue

Analysts at Maxim Group initiated coverage Wednesday of IntelGenx Technologies Corp (CVE:IGX, OTCMKTS:IGXT) with a buy rating and US$3 price target.

The Montreal, Canada-based drug delivery company develops novel oral immediate-release and controlled-release products for the pharmaceutical market.

Maxim said the company’s VersaFilm thin film drug delivery technology allows for more “rapid drug absorption, improved bioavailability,” abuse resistance and patient convenience.

“Repurposed Singulair (montelukast), the asthma drug is being formulated with VersaFilm for the treatment of neurodegenerative brain diseases,” wrote Maxim Group analysts Jason McCarthy and Caroline Palomeque in a note to clients.

Montelukast has been approved by the US Food and Drug Administration in 1997 for the treatment of asthma and seasonal allergic rhinitis.

In a recent Phase 1 study, IntelGenx demonstrated that an oral film formulation of Montelukast is safe and tolerable in healthy subjects, reduces the first-pass-effect and has a 52% higher bioavailability compared to the regular Montelukast tablet. IntelGenx's oral film also crossed the blood-brain barrier, an essential feature for treating degenerative brain diseases.

IntelGenx Technologies has three drug delivery platform technologies, which consist of VersaFilm, an oral film technology; VersaTab, a multilayer tablet technology; and AdVersa, a mucoadhesive tablet technology. 

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

“With pharma partnerships and combined markets that generate US$15bn annually, only a 1% share could mean US$18mln-US$20mln in royalties in 2020. Multiple other products are in development as are drug formulations using a controlled-release oral tablet, AdVersa,” they added.

Investment thesis

The analysts saw VersaFilm as “a disruptive technology” for drug delivery and said pharma partnerships positioned IntelGenx to generate “significant royalty revenue as new products launch.”

“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,” wrote the analysts.

Shares of IntelGenx Technologies closed flat at US$0.78 in the OTC Market.

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