Filed pursuant to Rule 424(b)(3)
Registration No.
333-190065
PROSPECTUS SUPPLEMENT NO. 2
(to Prospectus dated
April 30, 2014)
INTELGENX TECHNOLOGIES CORP.
Up to 7,920,346 shares of Common Stock issuable upon exercise of
7,920,346 Warrants
The prospectus supplement modifies and supplements the
prospectus of Intelgenx Technologies Corp. (the Company) dated April 30, 2014,
as supplemented by supplement no. 1 dated September 4, 2014, which relates to
the issuance and sale of 7,920,346 shares of the common stock of the Company to
holders of outstanding warrants upon exercise of such warrants. The warrants
were issued on December 16, 2013 in a registered offering. The warrants have an
exercise price of $0.5646 per share and are exercisable at any time prior to the
close of business on December 15, 2018.
This prospectus supplement should be read in conjunction with,
and may not be delivered or utilized without, the prospectus, including any
amendments or supplements thereto. This prospectus supplement is qualified in
its entirety by reference to the prospectus, except to the extent that the
information in this prospectus supplement supersedes the information contained
in the prospectus.
This prospectus supplement includes the attached quarterly
report on Form 10-Q, as filed with the Securities and Exchange Commission (the
SEC) on September 4, 2014.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS
APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY
OF THIS PROSPECTUS SUPPLEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date of this prospectus supplement is September 4, 2014.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30,
2014
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to_________
Commission File Number 000-31187
INTELGENX TECHNOLOGIES
CORP.
(Exact name of small business issuer as
specified in its charter)
Delaware |
87-0638336 |
(State or other jurisdiction of |
(I.R.S. Employer Identification No.) |
incorporation or organization) |
|
6425 Abrams, Ville Saint Laurent, Quebec H4S 1X9,
Canada
(Address of principal executive offices)
(514) 331-7440
(Issuer's telephone
number)
__________________________________________________________
(Former Name, former Address, if changed since last report)
Indicate by checkmark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes
[X] No [ ]
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of large accelerated filer,
accelerated filer, non-accelerated filer and smaller reporting company in
Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] |
|
Accelerated
filer
[ ] |
Non-accelerated filer [ ] |
(Do not check if a smaller
reporting company) |
Smaller reporting company [X]
|
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDS
DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13, or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of securities
under a plan confirmed by a court.
Yes [
] No [ ]
APPLICABLE TO CORPORATE ISSUERS:
63,465,256 shares of the issuers common stock, par value
$.00001 per share, were issued and outstanding as of August 7, 2014.
IntelGenx Technologies Corp.
Form 10-Q
TABLE OF CONTENTS
|
PART
I. FINANCIAL INFORMATION |
1 |
|
|
|
Item
1. |
Financial
Statements |
1 |
|
|
|
|
Consolidated
Balance Sheet |
2 |
|
|
|
|
Statement
of Shareholders Equity |
3 |
|
|
|
|
Statement
of Operations and Comprehensive Loss |
4 |
|
|
|
|
Statement
of Cash Flows |
5 |
|
|
|
|
Notes
to Financial Statements |
6 |
|
|
|
Item
2. |
Management's
Discussion and Analysis and Results of Operations |
11 |
|
|
|
Item
3. |
Controls
and Procedures |
20 |
|
|
|
|
PART
II. OTHER INFORMATION |
21 |
|
|
|
Item
1. |
Legal
Proceedings |
21 |
|
|
|
Item
2. |
Unregistered
Sales of Equity Securities and Use of Proceeds |
21 |
|
|
|
Item
3. |
Defaults
upon Senior Securities |
21 |
|
|
|
Item
4. |
Reserved |
21 |
|
|
|
Item
5. |
Other
Information |
21 |
|
|
|
Item
6. |
Exhibits |
21 |
|
|
|
|
Signatures |
22 |
IntelGenx Technologies Corp.
Consolidated Interim Financial Statements
June 30, 2014
(Expressed in U.S. Funds)
(Unaudited)
Contents |
|
|
|
Consolidated
Balance Sheet |
2 |
|
|
Consolidated
Statement of Shareholders' Equity |
3 |
|
|
Consolidated
Statement of Comprehensive Loss |
4 |
|
|
Consolidated
Statement of Cash Flows |
5 |
|
|
Notes
to Consolidated Financial Statements |
6
- 10 |
1
IntelGenx Technologies Corp.
Consolidated Balance Sheet
(Expressed in
Thousands of U.S. Dollars ($000s) Except Share and Per Share Data)
(Unaudited)
|
|
June 30, |
|
|
December 31, |
|
|
|
2014 |
|
|
2013
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
|
|
|
|
|
Cash and cash equivalents
|
$ |
5,178 |
|
$ |
5,005 |
|
Accounts
receivable |
|
53 |
|
|
144 |
|
Prepaid expenses |
|
93 |
|
|
133 |
|
Investment tax credits
receivable |
|
217 |
|
|
268 |
|
|
|
|
|
|
|
|
Total Current Assets |
|
5,541 |
|
|
5,550 |
|
|
|
|
|
|
|
|
Leasehold Improvements and Equipment,
net |
|
744 |
|
|
588 |
|
|
|
|
|
|
|
|
Intangible Assets (note 4) |
|
59 |
|
|
79 |
|
|
|
|
|
|
|
|
Total Assets |
$ |
6,344 |
|
$ |
6,217 |
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued liabilities |
|
266 |
|
|
593 |
|
|
|
|
|
|
|
|
Deferred license revenue
(note 5) |
|
358 |
|
|
308 |
|
|
|
|
|
|
|
|
Total Current Liabilities |
|
624 |
|
|
901 |
|
|
|
|
|
|
|
|
Deferred License Revenue, non-current portion (note
5) |
|
154 |
|
|
308 |
|
|
|
|
|
|
|
|
Total Liabilities |
|
778 |
|
|
1,209 |
|
|
|
|
|
|
|
|
Shareholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Stock (note 6) |
|
1 |
|
|
1 |
|
|
|
|
|
|
|
|
Additional Paid-in-Capital |
|
22,618 |
|
|
20,934 |
|
|
|
|
|
|
|
|
Accumulated Deficit |
|
(17,158 |
) |
|
(16,102 |
) |
|
|
|
|
|
|
|
Accumulated Other Comprehensive Income |
|
105 |
|
|
175 |
|
|
|
|
|
|
|
|
Total Shareholders Equity |
|
5,566 |
|
|
5,008 |
|
|
|
|
|
|
|
|
|
$ |
6,344 |
|
$ |
6,217 |
|
See accompanying notes
Approved on Behalf of the Board:
/s/ J. Bernard Boudreau
Director
/s/ Horst G.
Zerbe
Director
2
IntelGenx Technologies Corp.
Consolidated Statement of
Shareholders' Equity
For the Period Ended June 30, 2014
(Expressed in Thousands of U.S. Dollars ($000s)
Except Share and Per Share Data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
|
|
|
Other |
|
|
Total |
|
|
|
Capital Stock |
|
|
Paid-In |
|
|
Accumulated |
|
|
Comprehensive |
|
|
Shareholders' |
|
|
|
Number |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Income |
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - December 31, 2013 |
|
60,984,267 |
|
$ |
1 |
|
$ |
20,934 |
|
$ |
(16,102 |
) |
$ |
175 |
|
$ |
5,008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(70 |
) |
|
(70 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants exercised (note 7) |
|
2,480,988 |
|
|
- |
|
|
1,619 |
|
|
- |
|
|
- |
|
|
1,619 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation (note 7) |
|
- |
|
|
- |
|
|
65 |
|
|
- |
|
|
- |
|
|
65 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the period |
|
- |
|
|
- |
|
|
- |
|
|
(1,056 |
) |
|
- |
|
|
(1,056 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance June 30, 2014 |
|
63,465,255 |
|
$ |
1 |
|
$ |
22,618 |
|
$ |
(17,158 |
) |
$ |
105 |
|
$ |
5,566 |
|
See accompanying notes
3
IntelGenx Technologies Corp.
Consolidated Statement of Comprehensive Income (Loss)
(Expressed in Thousands of U.S. Dollars ($000s) Except Share and Per
Share Data)
(Unaudited)
|
|
For the Three-Month Period |
|
|
For the Six-Month Period |
|
|
|
Ended June 30, |
|
|
Ended June 30, |
|
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Royalties |
$ |
84 |
|
$ |
14 |
|
$ |
181 |
|
$ |
91 |
|
License and other revenue |
|
76 |
|
|
533 |
|
|
201 |
|
|
613 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Revenues |
|
160 |
|
|
547 |
|
|
382 |
|
|
704 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development expense |
|
225 |
|
|
48 |
|
|
413 |
|
|
215 |
|
Selling, general and administrative expense |
|
543 |
|
|
394 |
|
|
1,003 |
|
|
850 |
|
Depreciation of
tangible assets |
|
7 |
|
|
7 |
|
|
14 |
|
|
17 |
|
Amortization of
intangible assets |
|
11 |
|
|
9 |
|
|
20 |
|
|
19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Costs and Expenses |
|
786 |
|
|
458 |
|
|
1,450 |
|
|
1,101 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit (Loss) from Operations |
|
(626 |
) |
|
89 |
|
|
(1,068 |
) |
|
(397 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and
other income |
|
12 |
|
|
1 |
|
|
12 |
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Other Income |
|
12 |
|
|
1 |
|
|
12 |
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Profit (Loss) |
|
(614 |
) |
|
90 |
|
|
(1,056 |
) |
|
(396 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Comprehensive Income (Loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
161 |
|
|
(71 |
) |
|
(70 |
) |
|
(107 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive Profit (Loss) |
$ |
(453 |
) |
$ |
19 |
|
$ |
(1,126 |
) |
$ |
(503 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted Weighted Average Number of
Shares Outstanding |
|
63,187,029 |
|
|
51,166,323 |
|
|
62,628,686 |
|
|
51,133,173 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted Profit (Loss) Per Common Share (note 9) |
$ |
(0.01 |
) |
$ |
0.00 |
|
$ |
(0.02 |
) |
$ |
(0.01 |
) |
See accompanying notes
4
IntelGenx Technologies Corp.
Consolidated Statement of Cash Flows
(Expressed in thousands of U.S. Dollars ($000s) Except Share and Per
Share Data)
(Unaudited)
|
|
For the Three-Month Period |
|
|
For the Six-Month Period |
|
|
|
Ended June 30, |
|
|
Ended June 30, |
|
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds Provided (Used) - |
|
|
|
|
|
|
|
|
|
|
|
|
Operating Activities |
|
|
|
|
|
|
|
|
|
|
|
|
Net profit (loss) |
$ |
(614 |
) |
$ |
90 |
|
$ |
(1,056 |
) |
$ |
(396 |
) |
Amortization and depreciation |
|
18 |
|
|
16 |
|
|
34 |
|
|
36 |
|
Stock-based compensation |
|
33 |
|
|
30 |
|
|
65 |
|
|
48 |
|
|
|
(563 |
) |
|
136 |
|
|
(957 |
) |
|
(312 |
) |
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
(27 |
) |
|
(190 |
) |
|
91 |
|
|
922 |
|
Prepaid expenses |
|
1 |
|
|
(5 |
) |
|
40 |
|
|
8 |
|
Investment tax credits receivable |
|
68 |
|
|
(25 |
) |
|
51 |
|
|
(55 |
) |
Accounts payable and accrued
liabilities |
|
(17 |
) |
|
(163 |
) |
|
(327 |
) |
|
(724 |
) |
Deferred revenue |
|
(77 |
) |
|
(76 |
) |
|
(104 |
) |
|
(153 |
) |
Net change in assets and liabilities |
|
(52 |
) |
|
(459 |
) |
|
(249 |
) |
|
(2 |
) |
Net cash used by operating activities |
|
(615 |
) |
|
(323 |
) |
|
(1,206 |
) |
|
(314 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing
Activities |
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from exercise of warrants and stock options |
|
555 |
|
|
587 |
|
|
1,619 |
|
|
782 |
|
Net cash provided by financing activities |
|
555 |
|
|
587 |
|
|
1,619 |
|
|
782 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing
Activities |
|
|
|
|
|
|
|
|
|
|
|
|
Additions to property and
equipment |
|
(63 |
) |
|
(92 |
) |
|
(168 |
) |
|
(161 |
) |
Net cash used in investing
activities |
|
(63 |
) |
|
(92 |
) |
|
(168 |
) |
|
(161 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (Decrease) in Cash and Cash
Equivalents |
|
(123 |
) |
|
172 |
|
|
245 |
|
|
307 |
|
Effect of Foreign Exchange on Cash and Cash |
|
|
|
|
|
|
|
|
|
|
|
|
Equivalents |
|
135 |
|
|
(56 |
) |
|
(72 |
) |
|
(82 |
) |
Cash and Cash Equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of Period |
|
5,166 |
|
|
2,168 |
|
|
5,005 |
|
|
2,059 |
|
End of Period |
$ |
5,178 |
|
$ |
2,284 |
|
$ |
5,178 |
|
$ |
2,284 |
|
See accompanying notes
5
IntelGenx Technologies Corp.
Notes to Consolidated Interim Financial Statements
June 30, 2014
(Expressed in U.S. Funds)
(Unaudited)
1. |
Basis of Presentation |
|
|
|
The accompanying unaudited consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by
generally accepted accounting principles for complete consolidated
financial statements. In the opinion of management, all adjustments
considered necessary for a fair presentation have been included. All such
adjustments are of a normal and recurring nature. |
|
|
|
These financial statements should be read in conjunction
with the audited consolidated financial statements at December 31, 2013.
Operating results for the three and six months ended June 30, 2014 are not
necessarily indicative of the results that may be expected for the year
ending December 31, 2014. The Company prepares its financial statements in
accordance with accounting principles generally accepted in the United
States (U.S. GAAP). This basis of accounting involves the application of
accrual accounting and consequently, revenues and gains are recognized
when earned, and expenses and losses are recognized when incurred.
|
|
|
|
The consolidated financial statements include the
accounts of the Company and its subsidiary companies. On consolidation,
all inter-entity transactions and balances have been eliminated.
|
|
|
|
The financial statements are expressed in U.S. funds.
|
|
|
|
Management has performed an evaluation of the Companys
activities through the date and time these financial statements were
issued and concluded that there are no additional significant events
requiring recognition or disclosure. |
|
|
2. |
Adoption of New Accounting Standards |
|
|
|
Revenue Recognition and Disclosures |
|
|
|
The FASB issued Update No. 2013-04, Liabilities (Topic
405)Obligations Resulting from Joint and Several Liability Arrangements
for Which the Total Amount of the Obligation Is Fixed at the Reporting
Date. The amendments in this Update provide guidance for the recognition,
measurement, and disclosure of obligations resulting from joint and
several liability arrangements for which the total amount of the
obligation within the scope of this Update is fixed at the reporting date,
except for obligations addressed within existing guidance in U.S. GAAP.
The guidance requires an entity to measure those obligations as the sum of
the amount the reporting entity agreed to pay on the basis of its
arrangement among its co-obligors and any additional amount the reporting
entity expects to pay on behalf of its co-obligors. The guidance in this
Update also requires an entity to disclose the nature and amount of the
obligation as well as other information about those obligations. For
public entities, the amendments in this ASU were applicable for fiscal
years, and interim periods within those years, beginning after December
15, 2013. The adoption of this Statement did not have a material effect on
the Companys financial position or results of operations.
|
6
IntelGenx Technologies Corp.
Notes to Consolidated Interim Financial Statements
June 30, 2014
(Expressed in U.S. Funds)
(Unaudited)
2. |
Adoption of New Accounting
Standards (Contd) |
|
|
|
The FASB issued Update No. 2013-05, Foreign Currency
Matters (Topic 830)Parents Accounting for the Cumulative Translation
Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets
within a Foreign Entity or of an Investment in a Foreign Entity. The
amendments in this Update resolve the diversity in practice about whether
Subtopic 810-10, ConsolidationOverall, or Subtopic 830-30, Foreign
Currency MattersTranslation of Financial Statements, applies to the
release of the cumulative translation adjustment into net income when a
parent either sells a part or all of its investment in a foreign entity or
no longer holds a controlling financial interest in a subsidiary or group
of assets that is a nonprofit activity or a business (other than a sale of
in substance real estate or conveyance of oil and gas mineral rights)
within a foreign entity. In addition, the amendments in this Update
resolve the diversity in practice for the treatment of business
combinations achieved in stages (sometimes also referred to as step
acquisitions) involving a foreign entity. For public entities, the
amendments in this ASU were effective prospectively for fiscal years, and
interim reporting periods within those years, beginning after December 15,
2013. The adoption of this Statement did not have a material effect on the
Companys financial position or results of operations. |
|
|
|
The FASB issued Update No. 2013-07, Presentation of
Financial Statements Liquidation Basis of Accounting. The objective of
this Update is to clarify when an entity should apply the liquidation
basis of accounting and to provide principles for the measurement of
assets and liabilities under the liquidation basis of accounting, as well
as any required disclosures. These amendments were effective for entities
that determine liquidation is imminent during annual reporting periods
beginning after December 15, 2013, and interim reporting periods therein.
Entitles should apply the requirements prospectively from the day that
liquidation becomes imminent. The adoption of this Statement did not have
a material effect on the Companys financial position or results of
operations. |
|
|
|
The FASB issued Update No. 2013-11, Income Taxes (Topic
740)Presentation of an Unrecognized Tax Benefit When a Net Operating Loss
Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.
The amendments in this ASU provide guidance on the financial statement
presentation of an unrecognized tax benefit when a net operating loss
carryforward, similar tax loss, or tax credit carryforward exists. The
amendments were effective for fiscal years, and interim periods within
those years, beginning after December 15, 2013 and should be applied
prospectively to all unrecognized tax benefits that exist at the effective
date. The adoption of this Statement did not have a material effect on the
Companys financial position or results of operations. |
|
|
3. |
Significant Accounting Policies |
|
|
|
Recently Issued Accounting Pronouncements
|
|
|
|
ASU 2014-12, Compensation Stock Compensation (Topic
718): Accounting for shared-based payments when the terms of an award
provide that a performance target could be achieved after the requisite
service period. |
|
|
|
The FASB has issued ASU No. 2014-12 which requires that a
performance target that affects vesting and that could be achieved after
the requisite service period be treated as a performance condition. A
reporting entity should apply existing guidance in Topic 718,
Compensation Stock Compensation, as it relates to awards with
performance conditions that affect vesting to account for such awards. The
performance target should not be reflected in estimating the grant-date fair value of the
award. Compensation cost should be recognized in the period in which it
becomes probable that the performance target will be achieved. The
amendments in this ASU are effective for annual periods and interim
periods within those annual periods beginning after December 15, 2015.
Earlier adoption is permitted. The adoption of ASU-2014-12 is not expected
to have material effect on the Companys financial position or results of
operations. |
7
IntelGenx Technologies Corp.
Notes to Consolidated Interim Financial Statements
June 30, 2014
(Expressed in U.S. Funds)
(Unaudited)
3. |
Significant Accounting Policies (Contd) |
|
|
|
ASU No. 2014-09, Revenues from Contracts with Customers
(Topic 606) |
|
|
|
The FASB and IASB (the Boards) have issued converged
standards on revenue recognition. ASU No. 2014-09 affects any entity using
U.S. GAAP that either enters into contracts with customers to transfer
goods or services or enters into contracts for the transfer of
nonfinancial assets unless those contracts are within the scope of other
standards. This ASU will supersede the revenue recognition requirements in
Topic 605, Revenue Recognition and most industry-specific guidance.
The core principle of the guidance is that an entity should recognize
revenue to depict the transfer of promised goods or services to customers
in an amount that reflects the consideration to which the entity expects
to be entitled in exchange for those goods or services. To achieve that
core principle, an entity should apply the following
steps: |
|
|
Step 1: Identify the contract(s)
with a customer. |
|
|
Step 2: Identify the performance
obligations in the contract. |
|
|
Step 3: Determine the transaction
price. |
|
|
Step 4: Allocate the transaction
price to the performance obligations in the contract. |
|
|
Step 5: Recognize revenue when
(or as) the entity satisfies a performance obligation.
|
For a public entity, the amendments in
this ASU are effective for annual reporting periods beginning after December 15,
2016, including interim periods within that reporting period. This ASU is to be
applied retrospectively, with certain practical expedients allowed. Early
application is not permitted. The Company is currently evaluating the impact of
this statement on its consolidated financial statements.
ASU No. 2014-08, Presentation of
Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360):
Reporting Discontinued Operations and Disclosures of Disposals of Components of
an Entity
The FASB has issued ASU No. 2014-08
which enhance convergence between U.S. GAAP and International Financial
Reporting Standards (IFRS). The amendments in the ASU change the criteria for
reporting discontinued operations while enhancing disclosures in this area. It
also addresses sources of confusion and inconsistent application related to
financial reporting of discontinued operations guidance in U.S. GAAP. Under the
new guidance, only disposals representing a strategic shift in operations should
be presented as discontinued operations. Those strategic shifts should have a
major effect on the organizations operations and financial results. Examples
include a disposal of a major geographic area, a major line of business, or a
major equity method investment. In addition, the new guidance requires expanded
disclosures about discontinued operations that will provide financial statement
users with more information about the assets, liabilities, income, and expenses
of discontinued operations. The amendments in the ASU are effective in the first
quarter of 2015 for public organizations with calendar year ends. Early adoption
is permitted. The adoption of ASU-2014-08 is not expected to have material
effect on the Companys financial position or results of operations.
8
IntelGenx Technologies Corp.
Notes to Consolidated Interim Financial Statements
June 30, 2014
(Expressed in U.S. Funds)
(Unaudited)
4. |
Intangible Assets |
|
|
|
As of June 30, 2014 NDA acquisition costs of $59 thousand
(December 31, 2013 - $79 thousand) were recorded as intangible assets on
the Companys balance sheet and represent the net book value of the final
progress payment related to the acquisition of 100% ownership of Forfivo
XL®. The asset is being amortized over its estimated useful life of 39
months. The Company commenced amortization upon commercial launch of the
product in October 2012. |
|
|
5. |
Deferred License Revenue |
|
|
|
Deferred license revenue represents upfront payments
received for the granting of licenses to the Companys patents,
intellectual property, and proprietary technology, for commercialization.
Deferred license revenue is recognized in income over the period where
sales of the licensed products will occur. |
|
|
|
Upon entering into the licensing agreement with Edgemont
Pharmaceuticals the Company received an upfront fee of $1 million, which
the Company recognized as deferred license revenue. The deferred license
revenue is being amortized in income over a period of 39 months, which is
the minimum period where sales of Forfivo XL® are expected to be
exclusive. |
|
|
|
In January, 2014 IntelGenx entered into a development and
commercialization agreement with Par Pharmaceutical, Inc. for two
products. The Company received $100 thousand upon execution of the
agreement, of which $50 thousand has been recognized as deferred revenue
until certain development milestones have been achieved. |
|
|
|
As a result of this policy, the Company has a deferred
revenue balance of $512 thousand at June 30, 2014 (December 31, 2013 -
$616 thousand) that has not been recognized as revenue. |
|
|
6. |
Capital Stock |
|
|
|
June 30, |
|
|
December 31, |
|
|
|
|
2014 |
|
|
2013 |
|
|
Authorized - 100,000,000 common shares of $0.00001 par value
20,000,000 preferred shares of $0.00001 par value
Issued -
63,465,255 (December 31, 2013 - 60,984,267) common shares
|
$ |
635 |
|
$ |
610 |
|
9
IntelGenx Technologies Corp.
Notes to Consolidated Interim Financial Statements
June 30, 2014
(Expressed in U.S. Funds)
(Unaudited)
7. |
Additional Paid-In Capital |
|
|
|
Stock options |
|
|
|
No stock options were exercised during the six month
period ended June 30, 2014. During the six month period ended June 31,
2013 a total of 75,000 stock options were exercised for 75,000 common
shares having a par value of $0 thousand in aggregate, for cash
consideration of $31 thousand, resulting in an increase in additional
paid-in capital of $31 thousand. |
|
|
|
Compensation expenses for stock-based compensation of $65
thousand and $48 thousand were recorded during the six month periods ended
June 30, 2014 and 2013 respectively. The entire amount expensed in 2014
relates to stock options granted to employees and directors. Of the amount
expensed in 2013, $37 thousand relates to stock options granted to
employees and directors and $11 thousand relates to options granted to
independent third party consultants. As at June 30, 2014 the Company has
$161 thousand (2013 - $229 thousand) of unrecognized stock- based
compensation. |
|
|
|
Warrants |
|
|
|
During the six month period ended June 30, 2014 a total
of 2,480,988 (2013 - 1,584,000) warrants were exercised for 2,480,988
(2013 - 1,584,000) common shares having a par value of $0 thousand in
aggregate, for cash consideration of $1,619 thousand (2013 - $751
thousand), resulting in an increase in additional paid-in capital of
$1,619 thousand (2013 - $750 thousand). |
|
|
8. |
Related Party Transactions |
|
|
|
Included in management salaries are $29 thousand (2013 -
$5 thousand) for options granted to the Chief Executive Officer, $Nil
(2013 - $10 thousand) for options granted to the Chief Operating Officer
and $22 thousand (2013 - $9 thousand) for options granted to the Chief
Financial Officer under the 2006 Stock Option Plan and $8 thousand (2013 -
$6 thousand) for options granted to non-employee directors. |
|
|
|
Also included in management salaries are director fees of
$88 thousand (2013 - $44 thousand) for attendance to board meetings and
audit committee meetings. |
|
|
|
In addition, during the first six months of 2013 the
Company paid $66 thousand in fees to a director under a management
consultancy agreement. No such fees were paid during the first six months
of 2014. |
|
|
|
The above related party transactions have been measured
at the exchange amount which is the amount of the consideration
established and agreed to by the related parties. |
|
|
9. |
Basic and Diluted Loss Per Common Share |
|
|
|
Basic and diluted loss per common share is calculated
based on the weighted average number of shares outstanding during the
period. The warrants and stock options have been excluded from the
calculation of diluted loss per share since they are
anti-dilutive. |
10
Item 2: MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Introduction to managements discussion and analysis
The purpose of this section, Managements Discussion and
Analysis of Financial Condition and Results of Operations, is to provide a
narrative explanation of the financial statements that enables investors to
better understand the business of the Company, to enhance the Companys overall
financial disclosures, to provide the context within which the Companys
financial information may be analyzed, and to provide information about the
quality of, and potential variability of, the Companys financial condition,
results of operations and cash flows. Unless otherwise indicated, all financial
and statistical information included herein relates to continuing operations of
the Company. Unless otherwise indicated or the context otherwise requires, the
words, IntelGenx, Company, we, us, and our refer to IntelGenx
Technologies Corp. and its subsidiaries, including IntelGenx Corp. This
information should be read in conjunction with the accompanying unaudited
Consolidated Financial Statements and Notes thereto.
Company background
We are a drug delivery company established in 2003 and
headquartered in Montreal, Quebec, Canada. Our focus is on the development of
novel oral immediate-release and controlled-release products for the
pharmaceutical market. Our business strategy is to develop pharmaceutical
products based on our proprietary drug delivery technologies and, once the
viability of a product has been demonstrated, to license the commercial rights
to partners in the pharmaceutical industry. In certain cases, we rely upon
partners in the pharmaceutical industry to fund development of the licensed
products, complete the regulatory approval process with the U.S. Food and Drug
Administration (FDA) or other regulatory agencies relating to the licensed
products, and assume responsibility for marketing and distributing such
products.
In addition, we may choose to pursue the development of certain
products until the project reaches the marketing and distribution stage. We will
assess the potential for successful development of a product and associated
costs, and then determine at which stage it is most prudent to seek a partner,
balancing such costs against the potential for additional returns earned by
partnering later in the development process.
We have also undertaken a strategy under which we will work
with pharmaceutical companies in order to develop new dosage forms for
pharmaceutical products for which patent protection is nearing expiration. Under
§(505)(b)(2) of the Food, Drug, and Cosmetics Act, the FDA may grant market
exclusivity for a term of up to three years of exclusivity following approval of
a listed drug that contains previously approved active ingredients but is
approved in a new dosage, dosage form, route of administration or combination,
or for a new use, the approval of which was required to be supported by new
clinical trials, other than bioavailability studies, conducted by or for the
sponsor.
We are currently continuing to develop the existing products in
our pipeline and may also perform research and development on other potential
products as opportunities arise.
We currently purchase and/or lease, on an as-needed basis, the
equipment necessary for performing research and development activities related
to our products.
We plan to hire new personnel, primarily in the areas of
research and development, manufacturing, and administration on an as-needed
basis as we enter into partnership agreements, establish our pilot plant
VersaFilm manufacturing capability, and increase our research and development
activities.
11
Key developments
Anti-migraine VersaFilm product
On February 4, 2014, together with our
co-development partner RedHill Biopharma Ltd. ("RedHill"), we announced receipt
of a Complete Response Letter ("CRL") from the FDA regarding the New Drug
Application ("NDA") for our VersaFilm product for the treatment of acute
migraines. The anti-migraine VersaFilm product is a proprietary oral thin film
formulation of rizatriptan benzoate, a 5-HT1 receptor agonist and the active
drug in Merck & Co.'s Maxalt®.
A CRL is issued by the FDA's Center for
Drug Evaluation and Research to inform companies that certain questions and
deficiencies remain that preclude the approval of the application in its present
form. The questions raised by the FDA in the CRL regarding the NDA for the
anti-migraine VersaFilm product primarily relate to Chemistry, Manufacturing
and Controls ("CMC") and to the packaging and labeling of the product. No
questions or deficiencies were raised relating to the product's safety and the
FDA's CRL does not require additional clinical studies.
On March 3, 2014 IntelGenx and RedHill
(the Companies) announced the submission of a response to the FDAs CRL and on
April 24, 2014 the Companies reported that the FDA had acknowledged receipt of
our response and has requested additional CMC data, which the Companies believe
they can supply based on available information.
The Companies further reported that a
supplier of raw material for the anti-migraine VersaFilm product is currently
holding compliance discussions with the FDA, which are independent of RedHill
and IntelGenx and are not specific to our anti-migraine VersaFilm product. The
Companies are diligently working on a variety of options to ensure continued
supply of the raw material regardless of the result of these compliance
discussions and have already identified and audited an alternative active
pharmaceutical ingredient (API) supplier and are preparing to manufacture the
batches required for the CRL response and to conduct the stability studies that
are required to support the switch to the new API.
On April 28, 2014 the Companies
announced the commencement of a comparative bioavailability clinical study
comparing the anti-migraine VersaFilm product to the European reference drug.
The study is intended to support the planned submission of a European Marketing
Authorization Application ("MAA") and follows a positive scientific advice
meeting with the German Federal Institute for Drugs and Medical Devices
("BfArM") announced by RedHill in November 2013. This single-dose, crossover,
comparative bioavailability study includes 26 healthy volunteers and is intended
to evaluate and compare the relative bioavailability and to assess the
bioequivalence of the anti-migraine VersaFilm product and the reference drug,
Maxalt® lingua, marketed in Germany by MSD SHARP & DOHME GMBH.
On May 21, 2014 the Companies announced
positive results from the comparative bioavailability study. The results are
subject to final quality assurance and an independent study report by the
Canadian clinical research organization ("CRO") that conducted the study. The
final independent report from the CRO is expected in the coming weeks.
In light of the positive results from
the bioavailability study and data from prior clinical studies conducted with
the anti-migraine VersaFilm product, and subject to various regulatory
requirements, the Companies plan to submit a European MAA during the third
quarter of 2014.
12
Par Pharmaceutical, Inc.
On January 13, 2014 we announced the
execution of a second development and commercialization agreement with Par
Pharmaceutical, Inc. ("Par") for two new products utilizing our proprietary oral
drug delivery platforms.
Under the terms of the agreement, Par
has obtained certain exclusive rights to market and sell our products in the
USA. In exchange we will receive upfront and milestone payments, together with a
share of the profits upon commercialization. In accordance with confidentiality
clauses contained in the agreement, the specifics of the products and financial
terms remain confidential.
Erectile Dysfunction VersaFilm product
On February 24, 2014 we announced the
completion of a pilot biostudy with our proprietary VersaFilm tadalafil product
for erectile dysfunction that indicated bioequivalence with the leading brand
reference listed drug (RLD) tadalafil product.
This was a randomized, two-period,
two-way crossover study in healthy male subjects. The study was designed to
determine whether VersaFilm tadalafil was bioequivalent as measured by industry
standard pharmacokinetic measures of peak plasma concentration (Cmax) and area
under the curve (AUC). The study results demonstrated that VersaFilm tadalafil
was within an acceptable range of bioequivalency with the RLD on both of these
measures.
Government Funding for CNS VersaFilm product
On April 30, 2014 we announced
financial support from the National Research Council of Canada Industrial
Research Assistance Program (NRC-IRAP). In addition to advisory services and
technological expertise, the funding provided by NRC-IRAP will support further
development of a product for the treatment of central nervous system (CNS)
diseases and disorders. The product will be based upon our proprietary, oral
thin film, VersaFilm, technology.
In order to maintain our competitive
advantage, no specific details related to this project are being disclosed at
this time.
U.S. patent allowances
On February 26, 2014 we announced
receipt of a Notice of Allowance ("NOA") from the United States Patent and
Trademark Office ("USPTO") for U.S. Patent Application Serial No. 11/647,033
entitled "Multilayer tablet" which covers the technology used in our
hypertension product currently under development. A second NOA has been received
for U.S. Patent Application Serial No. 11/782,838 entitled "Controlled-release
pharmaceutical tablets" which is related to the drug delivery technology used in
Forfivo XL®, our first FDA-approved product currently commercialized in the U.S.
These two NOA's conclude the examination of each U.S. patent application and
will result in the issuance of two U.S. patents after administrative processes
are completed.
On April 16, 2014 we announced receipt
of a further NOA from the USPTO for U.S. Patent Application Serial No.
12/836,810 entitled "Oral mucoadhesive dosage form" which covers IntelGenx'
proprietary AdVersa mucoadhesive drug delivery technology. This NOA concludes
the examination of the U.S. patent application and will result in the issuance
of a U.S. patent after the administrative process is completed.
Equity Analyst Coverage by H.C. Wainwright
Subsequent to the end of the quarter,
on July 1, 2014 we announced that H.C. Wainwright initiated equity analyst coverage of IntelGenx with a
"buy" rating and price target of $2. The stock closed at US$0.70 on the OTCQX
and at CAD$0.74 on the TSX-V on Friday, June 27, 2014.
13
A copy of the initiation report can be
accessed by clicking:
https://hcwco.bluematrix.com/docs/pdf/ff51024b-71e2-47c5-ab58-7d05118ab4aa.pdf.
All reports on us prepared by analysts
represent the views of such analysts and are not necessarily those of IntelGenx.
We are not responsible for the content, accuracy or timelines provided by
analysts.
Management Changes
Subsequent to the end of the quarter,
on July 15, 2014 we announced that the board of directors (the "Board") of
IntelGenx had accepted, with immediate effect, the resignation of Dr. Rajiv
Khosla as President and Chief Executive Officer ("CEO") of IntelGenx and as a
member of the Board. The Board immediately appointed Dr. Horst G. Zerbe to serve
as our interim President and CEO until a successor is found, and a Search
Committee has been formed by the Board to begin the search, selection and
appointment of a new President and CEO.
Management Call
Subsequent to the end of the quarter,
on July 18, 2014 we announced that our interim CEO, Dr. Horst G. Zerbe, would
host a conference call on July 23, 2014 at 10:00 AM Eastern Time. During the
conference call, Dr. Zerbe provided a business update, discussed recent
management changes, and answered questions.
A replay of the call is available via
the homepage of our website, www.intelgenx.com, and will remain available until
at least September, 2014.
Currency rate fluctuations
Our operating currency is Canadian dollars, while our reporting
currency is U.S. dollars. Accordingly, our results of operations and balance
sheet position have been affected by currency rate fluctuations. The following
management discussion and analysis takes this into consideration whenever
material.
Results of operations for the six month period ended June
30, 2014 compared with the six month period ended June 30, 2013.
In U.S.$ thousands |
|
2014 |
|
|
2013 |
|
|
Increase/
(Decrease) |
|
|
Percentage
Increase/ (Decrease) |
|
Revenue |
$ |
382 |
|
$ |
704 |
|
$ |
(322 |
) |
|
(46% |
) |
Research and Development Expenses |
|
413 |
|
|
215 |
|
|
198 |
|
|
92% |
|
Selling, General and Administrative
Expenses |
|
1,003 |
|
|
850 |
|
|
153 |
|
|
18% |
|
Depreciation of tangible assets |
|
14 |
|
|
17 |
|
|
(3 |
) |
|
(18% |
) |
Amortization of intangible assets |
|
20 |
|
|
19 |
|
|
1 |
|
|
5% |
|
Net Loss |
|
(1,056 |
) |
|
(396 |
) |
|
660 |
|
|
167% |
|
14
Revenue
Total revenue decreased from $704 thousand in the first six months of 2013 to $382 thousand in the first six months of 2014.
Of the total revenue recorded during the first six months of 2014, $332 thousand (2013: $247 thousand) relates to Forfivo XL®, our first FDA approved product, which was launched in October 2012 under a licensing partnership with Edgemont
Pharmaceuticals LLP (“Edgemont”). Upon entering into the licensing agreement, Edgemont paid us an upfront fee of $1 million, which we recognized as deferred license revenue. The deferred license revenue is being amortized in income
over the period where sales of Forfivo XL® are expected to be exclusive. As a result of this policy, we recognized $153 thousand in income during the first six months of 2014 (2013: $156 thousand). In addition, we recognized
approximately $179 thousand (2013: $91 thousand) of royalty income in the first six months of 2014 that was earned from commercial sales of Forfivo XL®. Pursuant to the contractual terms, royalty income relates to sales of Forfivo
XL® recorded by Edgemont during the quarter preceding receipt of the royalty income by us. Forfivo XL® is indicated for the treatment of Major Depressive Disorder (“MDD”) and is the only extended-release bupropion HCl product to
provide a once-daily, 450mg dose in a single tablet.
Sales of Forfivo XL® continue to be below expectations and Management continues to explore options to accelerate sales growth of Forfivo XL®.
Revenue for the six months ended June 30, 2014 also includes a $50 thousand milestone payment in respect of one of the two new projects being developed in accordance with our new development and commercialization agreement with Par, utilizing
our proprietary oral drug delivery platforms. As previously stated, in accordance with confidentiality clauses contained in the agreement, the specifics of the product and financial terms remain confidential.
Revenue for the 6 months ended June 30, 2013 includes $256 thousand related to a development milestone for our VersaFilm™ buprenorphine/naloxone product for the treatment of opiate addiction. The milestone became due following the
successful completion of the pivotal bioequivalence study.
Also included in revenue for the first six months of 2013 is $201 thousand related to a development milestone for our anti-migraine VersaFilm™ oral film product. The milestone became due following confirmation that our NDA submission to
the FDA was sufficiently complete to permit a substantive review in accordance with the FDA's "standard" classification process.
Research and development (“R&D”) expenses
R&D expenses, net of R&D investment tax credits, totaled $413 thousand in the six months ended June 30, 2014, representing an increase of $198 thousand to the amount of $215 thousand expensed in the same period of 2013.
The increase in R&D expenses relates primarily to the costs of a pilot clinical study for our VersaFilm™ product for erectile dysfunction that was completed in Q1, 2014 and indicated bioequivalence with the leading brand reference listed
drug tadalafil product. R&D expenses also increased as a result of costs incurred in the development of our second Par project, which is progressing according to plan.
Included within R&D expenses for the first six months of 2014 are R&D Salaries of $240 thousand, of which approximately $4 thousand represents non-cash compensation. This compares to R&D salaries of $284 thousand in the first
six months of 2013, of which approximately $5 thousand represented non-cash compensation. The reduction in R&D salaries is primarily attributable to the retirement, effective December 31, 2013, of Dr. Horst Zerbe, our founder, and former
President and CEO. 50% of Dr. Zerbe’s expenses were previously apportioned to the R&D
department. Dr. Zerbe remained available to us to consult on R&D activities until, following the resignation of Dr. Rajiv Khosla, the Board appointed Dr. Zerbe Interim President and Interim CEO with effect from July 14, 2014.
15
In the six months ended June 30, 2014 we recorded estimated research and development tax credits and refunds of $36 thousand, compared with $69 thousand that was recorded in the same period of the previous year. The amounts of research and
development tax credits and refunds recorded by us may fluctuate from reporting period to reporting period depending upon the level of activity surrounding projects that we are currently progressing, together with whether or not we are able to
fulfill Canadian eligibility criteria for obtaining such tax credits and refunds.
Selling, general and administrative (“SG&A”) expenses
SG&A expenses totaled $1,003 thousand in the first 6 months of 2014, representing an increase of $153 thousand compared with $850 thousand in the first six months of 2013.
The increase in SG&A expenses relates primarily to an increase in legal expenses of approximately $82 thousand related to our Paragraph IV litigation with Wockhardt Bio AG (“Wockhardt”). In August 2013 we received a Paragraph IV
Certification Letter from Wockhardt, advising of the submission of an Abbreviated New Drug Application ("ANDA") to the FDA requesting authorization to manufacture and market generic versions of Forfivo XL® ("Forfivo") 450 mg capsules in the
United States. We continue to enforce our intellectual property rights for Forfivo XL®, which is currently protected by an issued patent listed in the FDA's Approved Drug Products List (Orange Book).
SG&A expenses also increased by approximately $47 thousand due to an increase in the remuneration of our Board of Directors that was effective from April 1, 2014.
Included in SG&A expenses are approximately $53 thousand (2013: $26 thousand) in non-cash compensation from options granted to management employees in 2012 and 2013, $8 thousand (2013: $6 thousand) in non-cash compensation from
options granted to non-employee directors in 2013, and $Nil (2013: $11 thousand) in non-cash compensation from options granted to consultants in 2012.
Depreciation of tangible assets
In the six months ended June 30, 2014 we recorded an expense of $14 thousand for the depreciation of tangible assets, compared with an expense of $17 thousand for the same period of the previous year. As at June 30, 2014 we are carrying
approximately $608 thousand of assets, primarily VersaFilm™ manufacturing equipment, that are not being depreciated as they are not currently in service.
Amortization of intangible assets
The amortization of intangible assets expensed for the first six months of 2014 totaled $20 thousand, compared with $19 thousand in the same period of last year. The expense relates to the amortization of NDA acquisition costs in respect of
the final progress payment to acquire 100% ownership of Forfivo XL®. Commercialization of Forfivo XL® in October 2012 triggered amortization of the asset over its estimated useful life of 39 months.
Share-based compensation expense, warrants and stock based payments
Share-based compensation expense, warrants and share-based payments totaled $65 thousand for the six months ended June 30, 2014, compared with $48 thousand for the six months ended June 30, 2013.
We expensed approximately $57 thousand in the first six months of 2014 for options granted to our employees in 2011 and 2012 under the 2006 Stock Option Plan, and
approximately $8 thousand for options granted to non-employee directors in 2013,
compared with $31 thousand and $6 respectively that was expensed in the same
period of the previous year.
16
We also expensed $11 thousand in the first six months of 2013
for options granted to consultants.
There remains approximately $161 thousand in stock based
compensation to be expensed in fiscal 2014 and 2015, all of which relates to the
issuance of options to our employees and directors during 2012 and 2013. We
anticipate the issuance of additional options and warrants in the future, which
will continue to result in stock-based compensation expense.
Key items from the balance sheet.
In U.S.$ thousands |
|
June 30, 2014
|
|
|
December 31,
2013 |
|
|
Increase/
(Decrease) |
|
|
Percentage
Increase/ (Decrease) |
|
Current Assets |
$ |
5,541 |
|
$ |
5,550 |
|
$ |
(9 |
) |
|
(0% |
) |
Leasehold improvements and Equipment |
|
744 |
|
|
588 |
|
|
156 |
|
|
27% |
|
Intangible Assets |
|
59 |
|
|
79 |
|
|
(20 |
) |
|
(25% |
) |
Current Liabilities |
|
624 |
|
|
901 |
|
|
(277 |
) |
|
(31% |
) |
Deferred License Revenue |
|
154 |
|
|
308 |
|
|
(154 |
) |
|
(50% |
) |
Capital Stock |
|
1 |
|
|
1 |
|
|
0 |
|
|
0% |
|
Additional Paid-in-Capital |
|
22,618 |
|
|
20,934 |
|
|
1,684 |
|
|
8% |
|
Current assets
Current assets totaled $5,541 thousand at June 30, 2014
compared with $5,550 thousand at December 31, 2013. The decrease of $9 thousand
is attributable to a decrease in accounts receivable of approximately $91
thousand, a decrease in prepaid expenses of approximately $40 thousand, and a
decrease in investment tax credits receivable of approximately $51 thousand,
partly offset by an increase in cash and cash equivalents of approximately $173
thousand
Cash and cash equivalents
Cash and cash equivalents totaled $5,178 thousand as at June
30, 2014 representing an increase of $173 thousand compared with the balance of
$5,005 thousand as at December 31, 2013. The increase in cash on hand relates to
net cash provided by financing activities of $1,619 thousand, partly offset with
net cash used by operating activities of $1,206 thousand, net cash used in
investing activities of $168 thousand and an unrealized foreign exchange loss of
$72 thousand.
The cash provided by financing activities derives from the
exercise of 2,480,988 warrants that were exercised for 2,480,988 common shares
for cash consideration of $1,619 thousand.
Accounts receivable
Accounts receivable totaled $53 thousand as at June 30, 2014
representing a decrease of $91 thousand compared with the balance of $144
thousand as at December 31, 2013. The decreased balance relates to the payment
of
invoices in Q1, 2014 that were issued and outstanding at December 31, 2013.
17
Prepaid expenses
As of June 30, 2014 prepaid expenses totaled $93 thousand compared with $133 thousand as of December 31, 2013. The decrease in prepaid expenses relates to a deposit paid in December 2013 for a biostudy undertaken in the first quarter of
2014, and a deposit paid in 2013 for R&D machinery to be supplied and installed in 2014.
Investment tax credits receivable
R&D investment tax credits receivable totaled approximately $217 thousand as at June 30, 2014 compared with $268 thousand as at December 31, 2013. The decrease relates to the receipt in Q2, 2014 of the balance of the fiscal 2012
investment tax credit receivable in the amount of $106 thousand, partly offset by the accrual recorded for the first six months of 2014.
Leasehold improvements and equipment
As at June 30, 2014, the net book value of leasehold improvements and equipment amounted to $744 thousand, compared to $588 thousand at December 31, 2013. In the six months ended June 30, 2014 additions to assets totaled $168 thousand
and comprised $36 thousand for pilot plant manufacturing equipment for our VersaFilm™ products, $107 thousand for R&D equipment, $16 thousand for leasehold improvements and $9 thousand for computer equipment. In the six
months ended June 30, 2014 we recorded depreciation on leasehold improvements and equipment of $14 thousand and incurred an unrealized foreign exchange gain of $2 thousand.
Intangible assets
As at June 30, 2014 NDA acquisition costs of $59 thousand (December 31, 2013 - $79 thousand) were recorded as intangible assets on our balance sheet and are related to the acquisition of 100% ownership of Forfivo XL®. The asset is being
amortized over its expected useful life of 39 months and amortization commenced upon commercial launch of Forfivo XL® in the fourth quarter of 2012.
Current liabilities
Current liabilities totaled $624 thousand as at June 30, 2014 (December 31, 2013 - $901 thousand) and consisted of accounts payable and accrued liabilities of $266 thousand (December 31, 2013 - $593 thousand) and the current portion
of deferred license revenue of $358 thousand (December 31, 2013 - $308 thousand).
Included in the accounts payable and accrued liabilities balance of $266 thousand as at June 30, 2014 is approximately $41 thousand relating to research and development activities, approximately $34 thousand relating to professional
fees, and approximately $146 thousand relates to accrued payroll liabilities. This compares with approximately $100 thousand relating to research and development activities, approximately $180 thousand relating to professional fees, of
which approximately $87 thousand relates to the public offering completed in December, 2013, and approximately $301 thousand relates to accrued payroll liabilities, that was included in the accounts payable and accrued liabilities balance as
at December 31, 2013.
Deferred license revenue
Pursuant to the execution of a licensing agreement for Forfivo XL®, we received an upfront fee from Edgemont Pharmaceuticals in the first quarter of 2012, which we recognized as deferred license revenue. The deferred license revenue is being
amortized in income over the period where sales of Forfivo XL®™ are expected to be exclusive. As a result of this policy, we have a deferred revenue balance
related to this upfront fee of $462 thousand at June 30, 2014 (December 31,
2013: $616 thousand) that has not been recognized as revenue, of which $154
thousand is recognized as the non-current portion and $308 thousand is
recognized in current assets as the current portion. This compares with $308
thousand and $308 thousand respectively as at December 31, 2013.
18
In January, 2014 IntelGenx entered into a development and
commercialization agreement with Par Pharmaceutical, Inc. for two products. The
Company received $100 thousand upon execution of the agreement, of which $50
thousand has been recognized in current liabilities as deferred revenue until
certain development milestones that are expected to be achieved in 2014 have
been realised.
Shareholders equity
As at June 30, 2014 we had accumulated a deficit of $17,158
thousand compared with an accumulated deficit of $16,102 thousand as at December
31, 2013. Total assets amounted to $6,344 thousand and shareholders equity
totaled $5,566 thousand as at June 30, 2014, compared with total assets and
shareholders equity of $6,217 thousand and $5,008 thousand respectively, as at
December 31, 2013.
Capital stock
As at June 30, 2014 capital stock amounted to $635 compared to
$610 at December 31, 2013. The increase reflects the issuance of 2,480,988
shares related to the exercise of warrants, with all shares issued at par value
of $0.00001. Capital stock is disclosed at its par value with the excess of
proceeds shown in Additional paid-in-capital.
Additional paid-in-capital
Additional paid-in capital totaled $22,618 thousand at June 30,
2014, compared with $20,934 thousand at December 31, 2013. Additional paid-in
capital increased by $1,619 thousand for warrants exercised during the first
quarter, and by $65 thousand for stock based compensation attributable to the
amortization of stock options granted to employees and directors.
Taxation
As at December 31, 2013, the date of our latest annual tax
return, we had Canadian and provincial net operating losses of approximately
$8,874 thousand (2012: $8,390 thousand) and $9,040 thousand (2012: $8,566
thousand) respectively, which may be applied against earnings of future years.
Utilization of the net operating losses is subject to significant limitations
imposed by the change in control provisions. Canadian and provincial losses will
be expiring between 2027 and 2033. A portion of the net operating losses may
expire before they can be utilized.
As at December 31, 2013, we had non-refundable tax credits of
$1,098 thousand (2012 - $914 thousand) of which $22 thousand is expiring in
2017, $212 thousand is expiring in 2018, $186 thousand is expiring in 2019, $158
thousand is expiring in 2020, $169 thousand is expiring in 2021, $232 thousand
is expiring in 2022 and $119 thousand is expiring in 2023. We also had
undeducted research and development expenses of $4,354 thousand (2012: $4,464
thousand) with no expiration date.
The deferred tax benefit of these items was not recognized in
the accounts as it has been fully provided for.
19
Key items from the statement of cash flows
In U.S.$ thousands |
|
June 30, 2014
|
|
|
June 30, 2013
|
|
|
Increase/
(Decrease) |
|
|
Percentage
Increase/ (Decrease) |
|
Operating Activities |
$ |
(1,206 |
) |
$ |
(314 |
) |
$ |
892 |
|
|
284% |
|
Financing Activities |
|
1,619 |
|
$ |
782 |
|
$ |
837 |
|
|
107% |
|
Investing Activities |
|
(168 |
) |
|
(161 |
) |
|
7 |
|
|
4% |
|
Cash and cash equivalents - end of period |
|
5,178 |
|
|
2,284 |
|
|
2,894 |
|
|
127% |
|
Statement of cash flows
Net cash used by operating activities was $1,206 thousand in
the six months ended June 30, 2014, compared with $314 thousand for the six
months ended June 30, 2013. In the first six months of 2014, net cash used by
operating activities consisted of an operating loss of $957 thousand (2013: $312
thousand) net of non-cash related expenses of approximately $99 thousand (2013:
$84 thousand), and a decrease in non-cash operating elements of working capital
of $249 thousand, compared with a decrease of $2 thousand in the same period of
the previous year.
Operating activities will continue to consume our available
funds until we are able to generate increased revenues.
The net cash provided by financing activities was $1,619
thousand in the first six months of 2014, compared with $782 thousand provided
in the same period of the previous year. The net cash provided in the first six
months of 2014 resulted from the exercise of 2,480,988 warrants, whereas the
cash provided in the first six months of 2013 resulted from the exercise of
1,584,000 warrants and 75,000 stock options.
Net cash used in investing activities amounted to $168 thousand
in the six months ended June 30, 2014 compared with $161 thousand in the six
months ended June 30, 2013. Included within the use of funds in the first six
months of 2014 is an investment of approximately $36 thousand (2013: $160
thousand) for pilot plant manufacturing equipment for our VersaFilm products,
$107 thousand (2013: $Nil) for R&D equipment, $16 thousand (2013: $Nil) for
leasehold improvements and $9 thousand (2013: $1 thousand) for computer
equipment.
The balance of cash and cash equivalents as at June 30, 2014
amounted to $5,178 thousand, compared with $2,284 thousand at June 30, 2013.
Off-balance sheet arrangements
We have no off-balance sheet arrangements.
Item 3. Controls and Procedures.
As of the end of the period covered by this
report, we carried out an evaluation, under the supervision and with the
participation of management, including our chief executive officer and principal
financial officer, of the effectiveness of the design and operation of our
disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e)
of the Securities Exchange Act of 1934. Based upon that evaluation, our chief
executive officer and principal financial officer concluded that our disclosure
controls and procedures are effective to cause the material information required
to be disclosed by us in the reports that we file or submit under the Exchange
Act to be recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms. There have been no significant changes
in our internal controls or in other factors which could significantly affect
internal controls subsequent to the date we carried out our evaluation.
20
PART II
Item 1. Legal Proceedings
This Item is not applicable
Item 2. Unregistered Sales of Equity Securities and Use of
Proceeds
This Item is not applicable.
Item 3. Defaults Upon Senior Securities
This Item is not applicable.
Item 4. (Reserved)
Item 5. Other Information
This Item is not applicable.
Item 6. Exhibits
Exhibit 31.1 |
Certification of C.E.O. Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002. |
|
|
Exhibit 31.2 |
Certification of Principal Accounting Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
Exhibit 32.1 |
Certification of C.E.O. pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of
2002. |
|
|
Exhibit 32.2 |
Certification of Principal Accounting Officer pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002. |
21
SIGNATURES
In accordance with the
requirements of the Securities Exchange Act of 1934, the Registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
INTELGENX TECHNOLOGIES CORPORATION
Date: |
August 7, 2014 |
By: |
/s/ Horst G. Zerbe |
|
|
|
------------------------------------ |
|
|
|
Horst G. Zerbe |
|
|
|
Interim President, Interim Chief Executive
Officer |
|
|
|
and Director |
|
|
|
|
|
|
|
|
|
|
|
|
Date: |
August 7, 2014 |
By: |
/s/ Paul A. Simmons |
|
|
|
------------------------------------ |
|
|
|
Paul A. Simmons |
|
|
|
Chief Financial Officer |
|
|
|
(Principal Accounting Officer) |
22
Exhibit 31.1
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY
ACT OF 2002
I, Horst G. Zerbe, Interim Chief Executive Officer
of IntelGenx Technologies Corp. (the "registrant"), certify that:
1. I have reviewed this quarterly report on Form 10-Q of IntelGenx Technologies
Corp.;
2.
Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
4.
The registrant's other certifying officer and I are responsible for establishing
and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we
have:
a)
Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
d)
Disclosed in this report any change in the registrant's internal control over
financial reporting that occurred during the registrant's most recent fiscal
quarter (the registrant's fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of registrant's board of directors
(or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation
of internal control over financial reporting which are reasonably likely to
adversely affect the registrant's ability to record, process, summarize and
report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees
who have a significant role in the registrant's internal control over financial
reporting.
Date: August 7, 2014
/s/ Horst G.
Zerbe |
|
|
Horst G. Zerbe |
|
|
Interim Chief Executive Officer |
|
|
Exhibit 31.2
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY
ACT OF 2002
I, Paul A. Simmons, Principal Accounting Officer of
IntelGenx Technologies Corp. (the "registrant"), certify that:
1.
I have reviewed this quarterly report on Form 10-Q of IntelGenx Technologies
Corp. ;
2.
Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
4.
The registrant's other certifying officer and I are responsible for establishing
and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we
have:
a)
Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
d)
Disclosed in this report any change in the registrant's internal control over
financial reporting that occurred during the registrant's most recent fiscal
quarter (the registrant's fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of registrant's board of directors
(or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation
of internal control over financial reporting which are reasonably likely to
adversely affect the registrant's ability to record, process, summarize and
report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees
who have a significant role in the registrant's internal control over financial
reporting.
Date: August 7, 2014
/s/ Paul
A. Simmons |
|
|
Paul A. Simmons |
|
|
Chief Financial Officer |
|
|
(Principal Accounting Officer) |
|
|
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS
ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of
IntelGenx Technologies Corporation (the "Company") on Form 10-Q for the period
ending June 30, 2014, as filed with the Securities and Exchange Commission on
the date hereof (the "Report"), I, Horst G. Zerbe, Interim Chief Executive
Officer of the Company, certify, pursuant to 18 U.S.C. Sec. 1350, as adopted
pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my
knowledge and belief:
(1) The Report fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;
and
(2) The information contained in the Report fairly
presents, in all material respects, the financial condition and result of
operations of the Company.
/s/ Horst G. Zerbe
|
|
|
Horst G. Zerbe |
|
|
Interim Chief Executive Officer |
|
|
August 7, 2014 |
|
|
A signed original of this written statement required by
Section 906, or other document authenticating, acknowledging, or otherwise
adopting the signature that appears in typed form within the electronic version
of this written statement has been provided to the Company and will be retained
by the Company and furnished to the Securities and Exchange Commission or its
staff upon request. The foregoing certifications are accompanying the Company's
Form 10-Q solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002
(subsections (a) and (b) of section 1350, chapter 63 of title 18, United States
Code) and is not being filed as part of the Form 10-Q or as a separate
disclosure document.
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS
ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with
the Quarterly Report of IntelGenx Technologies Corporation(the "Company") on
Form 10-Q for the period ending June 30, 2014, as filed with the Securities and
Exchange Commission on the date hereof (the "Report"), I, Paul A. Simmons,
Principal Accounting Officer of the Company, certify, pursuant to 18 U.S.C. Sec.
1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that,
to the best of my knowledge and belief:
(1) The Report fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;
and
(2) The information contained in the Report fairly
presents, in all material respects, the financial condition and result of
operations of the Company.
/s/ Paul
A. Simmons |
|
|
Paul A. Simmons |
|
|
Chief Financial Officer |
|
|
(Principal Accounting Officer) |
|
|
August 7, 2014 |
|
|
A signed original of this written statement
required by Section 906, or other document authenticating, acknowledging, or
otherwise adopting the signature that appears in typed form within the
electronic version of this written statement has been provided to the Company
and will be retained by the Company and furnished to the Securities and Exchange
Commission or its staff upon request. The foregoing certifications are
accompanying the Company's Form 10-Q solely pursuant to section 906 of the
Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63
of title 18, United States Code) and is not being filed as part of the Form 10-Q
or as a separate disclosure document.
IntelGenx Technologies (QB) (USOTC:IGXT)
Historical Stock Chart
From Apr 2024 to May 2024
IntelGenx Technologies (QB) (USOTC:IGXT)
Historical Stock Chart
From May 2023 to May 2024