Aegis Capital Corp Update - Oct. 5, 2012


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IntelGenx, through its cutting edge formulation platforms, has developed a broad and diverse product portfolio, including products for the treatment of severe depression, hypertension, erectile dysfunction, benign prostatic hyperplasia, migraine, insomnia, bipolar disorder, idiopathic pulmonary fibrosis, allergies and pain management.

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Aegis Capital Corp Update - Oct. 5, 2012

  1. 1. Biopharmaceuticals Raghuram Selvaraju, Ph.D. (646) 502-2464 Yi Chen, Ph.D. (646) 502-2463 Company UpdateOctober 5, 2012Key Metrics IntelGenx Technologies Corp. Rating: Buy IGXT - OTC $0.61 Pricing Date Oct 4 2012 $3.00 Forfivo Gets A Tailwind Price Target 52-Week Range $0.74 - $0.40 Shares Outstanding (mm) 49.6 Market Capitalization ($mm) $30.3 Investment Highlights: 3-Mo Average Daily Volume 78,441 ■ Teva Gets Smacked. The FDA asked Teva Pharmaceuticals (TEVA Institutional Ownership 0% - Not Rated) to withdraw its drug Budeprion XL 300 from the U.S. Debt/Total Capital NM market citing concerns over a lack of bioequivalence to Wellbutrin XL ROE NM 300. We consider this development a net positive for IntelGenx as it Book Value/Share $0.06 prepares, with its partner Edgemont, to launch Forfivo™. We reiterate Price/Book 10.2x our Buy rating and 18-month price target of $3.00 per share on IGXT. Dividend Yield NM LTM EBITDA Margin NM ■ Runway Cleared For Forfivo™ Launch. FDA’s new testing showed Teva’s Budeprion XL 300 releases its key ingredient faster thanEPS ($) FY: December Prior Curr. Prior Curr. the original drug Wellbutrin XL 300 (bupropion extended-release 2011A 2012E 2012E 2013E 2013E 300 mg), made by GlaxoSmithKline to treat depression, anxiety and 1Q-Mar (0.01) -- (0.01)A -- 0.00E symptoms of nicotine withdrawal. An independent ConsumerLab 2Q-Jun (0.01) -- (0.01)A -- 0.00E analysis demonstrated that Budeprion XL released 34% of its active 3Q-Sep (0.02) -- (0.01)E -- 0.00E ingredient in just two hours, compared to 8% for the original drug. 4Q-Dec (0.01) -- (0.01)E -- 0.01E FDA’s review came after hundreds of patients complained that Tevas FY (0.05) -- (0.04)E -- 0.01E drug did not work as well or caused side effects like headaches, P/E NM NM 61.00x anxiety, and insomnia. Teva is the worlds largest generics firm and stopped shipping the drug last Thursday. The fact that it is beingRevenue ($M) forced to withdraw from the bupropion market could have a significant Prior Curr. Prior Curr. positive impact on IntelGenxs product opportunity, in our view, and 2011A 2012E 2012E 2013E 2013E substantially improve the launch trajectory of Forfivo™ (bupropion 1Q-Mar 0.1 -- 0.3A -- 0.8E extended-release 450 mg). 2Q-Jun 0.1 -- 0.0A -- 0.9E 3Q-Sep 0.0 -- 0.2E -- 1.1E 4Q-Dec 0.3 -- 0.5E -- 1.3E FY 0.4 -- 1.0E -- 4.0ECompany Description:IntelGenx ( is an emerging firm developingnovel formulations of existing drugs. The Disclosure section may be found on pages 3 - 4 of this report.
  2. 2. IntelGenx Technologies Corp. October 5, 2012 2 AEGIS CAPITAL CORP.
  3. 3. IntelGenx Technologies Corp. October 5, 2012 Required Disclosures Price Target Our 18-month price target for IGXT is $3.00 per share. Valuation Methodology We utilize a risk-adjusted Net Present Value (rNPV) analysis to determine our price target objective. Using a discounted cash flow analysis, we derive an rNPV-based total firm value of $180 million, which translates into a price per share of $3.00, assuming 65 million fully-diluted shares outstanding and $17 million in cash as of the end of 2013. Risk Factors Issues that could prevent the achievement of our price objective include, but are not limited to, clinical, regulatory, competitive, reimbursement and financial risks. Drugs in clinical development may not advance due to inadequate safety, efficacy, or tolerability. Regulatory agencies may decline to approve regulatory submissions in a timely manner, or may not approve a drug candidate at all. The firm may require substantial funding to advance the clinical progress of its candidates, which could be dilutive to current shareholders. We expect competition for the companys drugs from several public and private companies developing pharmaceuticals. Sales of the firms drugs could depend upon reimbursement from private, as well as public, reimbursement agencies. For important disclosures go to We, Raghuram Selvaraju and Yi Chen, the authors of this research report, certify that the views expressed in this report accurately reflect our personal views about the subject securities and issuers, and no part of our compensation was, is, or will be directly or indirectly tied to the specific recommendations or views contained in this research report. Research analyst compensation is dependent, in part, upon investment banking revenues received by Aegis Capital Corp. Aegis Capital Corp. intends to seek or expects to receive compensation for investment banking services from the subject company within the next three months. Investment Banking Services/Past 12 Mos. Rating Percent Percent BUY [BUY] 95.00 31.58 HOLD [HOLD] 5.00 0.00 SELL [SELL] 0.00 0.00 Meaning of Ratings A) A Buy rating is assigned when we do not believe the stock price adequately reflects a companys prospects over 12-18 months. B) A Hold rating is assigned when we believe the stock price adequately reflects a companys prospects over 12-18 months. C) A Sell rating is assigned when we believe the stock price more than adequately reflects a companys prospects over 12-18 months. Other Disclosures The information contained herein is based upon sources believed to be reliable but is not guaranteed by us and is not considered to be all inclusive. It is not to be construed as an offer or the solicitation of an offer to sell or buy the securities mentioned herein. Aegis Capital Corp., its affiliates, shareholders, officers, staff, and/or members of their families, may have a position in the securities mentioned herein, and, before or after your receipt of this report, may make or recommend purchases and/or sales for their own accounts or for the accounts of other customers of the Firm from time to time in the open market or otherwise. Opinions expressed are our present opinions only and are subject to change without notice. Aegis Capital is under no obligation to provide updates to the opinions or information provided herein. Additional information is available upon request. © Copyright 2012 by Aegis Capital 3 AEGIS CAPITAL CORP.
  4. 4. IntelGenx Technologies Corp. October 5, 2012 Aegis Capital Corp. (212) 813-1010 810 Seventh Avenue, 18th Floor New York, New York 10019 4 AEGIS CAPITAL CORP.