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 September 30,
2015
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:
63,615,256 shares of the issuers common stock, par value
$.00001 per share, were issued and outstanding as of November 2, 2015.
IntelGenx Technologies Corp.
Form 10-Q
TABLE OF CONTENTS
|
PART I. FINANCIAL
INFORMATION |
|
|
|
|
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 |
17 |
|
|
|
Item
3. |
Controls
and Procedures |
27 |
|
|
|
|
|
|
|
PART II. OTHER INFORMATION |
|
|
|
|
Item
1. |
Legal
Proceedings |
28 |
|
|
|
|
|
|
Item
2. |
Unregistered
Sales of Equity Securities and Use of Proceeds |
28 |
|
|
|
Item
3. |
Defaults
upon Senior Securities |
28 |
|
|
|
Item
4. |
Reserved
|
28 |
|
|
|
Item
5. |
Other
Information |
28 |
|
|
|
Item
6. |
Exhibits
|
28 |
|
|
|
|
Signatures
|
28 |
IntelGenx Technologies Corp.
|
|
Consolidated Interim Financial Statements |
September 30, 2015 |
(Expressed in U.S. Funds) |
(Unaudited) |
Contents
Consolidated Balance Sheet |
2 |
|
|
Consolidated Statement of Shareholders' Equity |
3 |
|
|
Consolidated Statement of Comprehensive Income |
4 |
|
|
Consolidated Statement of Cash Flows |
5 |
|
|
Notes to Consolidated Financial Statements |
6 - 16 |
1
IntelGenx Technologies Corp.
|
|
Consolidated Balance Sheet |
(Expressed in Thousands of U.S. Dollars ($000s) Except
Share and Per Share Data) |
(Unaudited) |
|
|
September, 30 |
|
|
December 31, |
|
|
|
2015 |
|
|
2014 |
|
Assets |
|
|
|
|
|
|
Current |
|
|
|
|
|
|
Cash and cash equivalents |
$ |
2,264 |
|
$ |
4,399 |
|
Accounts
receivable |
|
878 |
|
|
652 |
|
Prepaid expenses |
|
74 |
|
|
96 |
|
Investment tax credits
receivable |
|
67 |
|
|
108 |
|
Total Current Assets
|
|
3,283 |
|
|
5,255 |
|
Leasehold Improvements and Equipment,
net |
|
3,576 |
|
|
983 |
|
Intangible Assets
(note 4) |
|
6 |
|
|
46 |
|
Security Deposit |
|
225 |
|
|
- |
|
Total Assets |
$ |
7,090 |
|
$ |
6,284 |
|
Liabilities |
|
|
|
|
|
|
Current |
|
|
|
|
|
|
Accounts
payable and accrued liabilities |
|
1,340 |
|
|
466 |
|
Current portion of term loan (note 7) |
|
74 |
|
|
- |
|
Deferred license revenue
(note 6) |
|
76 |
|
|
1,245 |
|
Total Current
Liabilities |
|
1,490 |
|
|
1,711 |
|
Term Loan (note 7) |
|
294 |
|
|
- |
|
Total Liabilities |
|
1,784 |
|
|
1,711 |
|
Shareholders' Equity |
|
|
|
|
|
|
Capital Stock (note 8)
|
|
1 |
|
|
1 |
|
Additional Paid-in-Capital (note 9)
|
|
22,821 |
|
|
22,654 |
|
Accumulated Deficit
|
|
(16,824 |
) |
|
(17,848 |
)
|
Accumulated Other Comprehensive Loss |
|
(692 |
) |
|
(234 |
) |
Total Shareholders Equity |
|
5,306 |
|
|
4,573 |
|
|
$ |
7,090 |
|
$ |
6,284 |
|
See accompanying notes
Approved on Behalf of the Board:
/s/ Horst G. Zerbe |
Director |
|
|
/s/
Bernd Melchers |
Director |
2
IntelGenx Technologies Corp. |
|
Consolidated Statement of Shareholders' Equity
|
For the Period Ended September 30, 2015 |
(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 |
|
|
Loss |
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - December 31,
2014 |
|
63,465,255 |
|
$ |
1 |
|
$ |
22,654 |
|
$ |
(17,848 |
)
|
$ |
(234 |
)
|
$ |
4,573
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation
adjustment |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(458 |
)
|
|
(458 |
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options exercised (note 9)
|
|
150,000 |
|
|
|
|
|
62 |
|
|
- |
|
|
- |
|
|
62 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
(note 9) |
|
- |
|
|
- |
|
|
105 |
|
|
- |
|
|
|
|
|
105 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income for the period |
|
- |
|
|
- |
|
|
- |
|
|
1,024 |
|
|
- |
|
|
1,024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance September 30,
2015 |
|
63,615,255
|
|
$ |
1
|
|
$ |
22,821
|
|
$ |
(16,824 |
)
|
$ |
(692 |
)
|
$ |
5,306
|
|
See accompanying notes
3
IntelGenx Technologies Corp.
|
|
Consolidated Statement of Comprehensive Income
|
(Expressed in Thousands of U.S. Dollars ($000s) Except
Share and Per Share Data) |
(Unaudited) |
|
|
For the
Three-Month Period |
|
|
For the
Nine-Month Period |
|
|
|
Ended September 30, |
|
|
Ended September 30, |
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
Royalties |
$ |
248 |
|
$ |
129 |
|
$ |
674 |
|
$ |
310 |
|
License and other
revenue |
|
2,135 |
|
|
323 |
|
|
2,919 |
|
|
524 |
|
Total Revenues |
|
2,383 |
|
|
452 |
|
|
3,593 |
|
|
834 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of royalty and license revenue |
|
189 |
|
|
- |
|
|
292 |
|
|
- |
|
Research and development expense |
|
274 |
|
|
359 |
|
|
643 |
|
|
772 |
|
Selling, general and administrative expense |
|
553 |
|
|
521 |
|
|
1,505 |
|
|
1,524 |
|
Depreciation of tangible assets |
|
6 |
|
|
11 |
|
|
19 |
|
|
25 |
|
Amortization of
intangible assets |
|
10 |
|
|
6 |
|
|
29 |
|
|
26 |
|
Total Expenses |
|
1,032 |
|
|
897 |
|
|
2,488 |
|
|
2,347 |
|
Operating income
(loss) |
|
1,351 |
|
|
(445 |
)
|
|
1,105 |
|
|
(1,513 |
)
|
Interest income |
|
7 |
|
|
11 |
|
|
20 |
|
|
23 |
|
Financing and Interest expense |
|
(6 |
) |
|
- |
|
|
(101 |
) |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) |
|
1,352 |
|
|
(434 |
)
|
|
1,024 |
|
|
(1,490 |
)
|
Other Comprehensive Loss |
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
currency translation adjustment |
|
(195 |
) |
|
(256 |
) |
|
(458 |
) |
|
(326 |
) |
Comprehensive Income (Loss) |
$ |
1,157 |
|
$ |
(690 |
) |
$ |
566 |
|
$ |
(1,816 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic: Weighted Average Number of Shares
Outstanding |
|
63,589,984 |
|
|
63,465,255 |
|
|
63,606,739 |
|
|
63,133,545 |
|
Basic Earnings (Loss) Per Common Share (note 12) |
$ |
0.02 |
|
$ |
(0.01 |
) |
$ |
0.01 |
|
$ |
(0.03 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted: Weighted Average Number of
Shares Outstanding |
|
64,030,092 |
|
|
63,465,255 |
|
|
71,725,902 |
|
|
63,133,545 |
|
Diluted Earnings (Loss) Per Common Share (note 12) |
$ |
0.02 |
|
$ |
(0.01 |
) |
$ |
0.01 |
|
$ |
(0.03 |
) |
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
Nine-Month Period |
|
|
|
Ended
September 30, |
|
|
Ended
September 30, |
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds Provided (Used)
- Operating Activities |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
1,352 |
|
$ |
(434 |
) |
$ |
1,024 |
|
$ |
(1,490 |
) |
Amortization and depreciation |
|
16 |
|
|
17 |
|
|
48 |
|
|
51 |
|
Stock-based compensation |
|
25 |
|
|
17 |
|
|
105 |
|
|
82 |
|
|
|
1,393 |
|
|
(400 |
)
|
|
1,177 |
|
|
(1,357 |
)
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
(763 |
) |
|
1 |
|
|
(226 |
) |
|
92 |
|
Prepaid expenses |
|
1 |
|
|
18 |
|
|
22 |
|
|
58 |
|
Investment tax
credits receivable |
|
(19 |
) |
|
(17 |
)
|
|
41 |
|
|
34 |
|
Security deposit |
|
15 |
|
|
- |
|
|
(225 |
) |
|
- |
|
Accounts payable
and accrued liabilities |
|
736 |
|
|
1 |
|
|
874 |
|
|
(326 |
)
|
Deferred revenue |
|
(390 |
) |
|
(77 |
) |
|
(1,169 |
) |
|
(180 |
) |
Net change in assets and liabilities |
|
(420 |
) |
|
(74 |
) |
|
(683 |
) |
|
(322 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash
provided (used) by operating activities |
|
973 |
|
|
(474 |
) |
|
494 |
|
|
(1,679 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of term loans |
|
- |
|
|
- |
|
|
394 |
|
|
- |
|
Repayment of term loans |
|
(6 |
) |
|
- |
|
|
(6 |
) |
|
- |
|
Proceeds
from exercise of warrants and stock options |
|
28 |
|
|
- |
|
|
62 |
|
|
1,619 |
|
Net cash provided by
financing activities |
|
22 |
|
|
- |
|
|
450 |
|
|
1,619 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
Additions to property and equipment |
|
(1,221 |
) |
|
(106 |
) |
|
(2,646 |
) |
|
(274 |
) |
Net cash used in investing
activities |
|
(1,221 |
) |
|
(106 |
) |
|
(2,646 |
) |
|
(274 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease in Cash and Cash
Equivalents |
|
(226 |
) |
|
(580 |
)
|
|
(1,702 |
) |
|
(334 |
)
|
Effect of Foreign Exchange on Cash and
Cash Equivalents |
|
(173 |
) |
|
(222 |
) |
|
(433 |
) |
|
(295 |
) |
Cash and Cash
Equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of Period |
|
2,663 |
|
|
5,178 |
|
|
4,399 |
|
|
5,005 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
End of Period |
$ |
2,264 |
|
$ |
4,376 |
|
$ |
2,264 |
|
$ |
4,376 |
|
See accompanying notes
5
IntelGenx Technologies Corp.
|
|
Notes to Consolidated Interim Financial Statements
|
September 30, 2015 |
(Expressed in U.S. Funds) |
(Unaudited) |
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, 2014. Operating results for the three months and nine months ended
September 30, 2015 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2015. 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 |
The FASB issued ASU No. 2014-08 which
enhances 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 expands
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 were effective in the
first quarter of 2015 for public organizations with calendar year ends. The
adoption of this Statement did not have a material effect on the Company`s
financial position or results of operations.
6
IntelGenx Technologies Corp.
|
|
Notes to Consolidated Interim Financial Statements
|
September 30, 2015 |
(Expressed in U.S. Funds) |
(Unaudited) |
3. |
Significant Accounting
Policies |
Recently Issued Accounting
Pronouncements
ASU 2015-16, Business Combinations
(Topic 805): Simplifying the Accounting for Measurement-Period Adjustments
The FASB issued this Update which
requires that an acquirer recognize adjustments to provisional amounts that are
identified during the measurement period in the reporting period in which the
adjustment amounts are determined. The amendments in this Update require that
the acquirer record, in the same periods financial statements, the effect on
earnings of changes in depreciation, amortization, or other income effects, if
any, as a result of the change to the provisional amounts, calculated as if the
accounting had been completed at the acquisition date. The amendments in this
Update require an entity to present separately on the face of the income
statement or disclose in the notes the portion of the amount recorded in
current-period earnings by line item that would have been recorded in previous
reporting periods if the adjustment to the provisional amounts had been
recognized as of the acquisition date.
The amendments in this Update apply to
all entities that have reported provisional amounts for items in a business
combination for which the accounting is incomplete by the end of the reporting
period in which the combination occurs and during the measurement period have an
adjustment to provisional amounts recognized.
For public business entities, the
amendments in this Update are effective for fiscal years beginning after
December 15, 2015, including interim periods within those fiscal years. The
amendments in this Update should be applied prospectively to adjustments to
provisional amounts that occur after the effective date of this Update with
earlier application permitted for financial statements that have not yet been
issued.
For all other entities, the amendments
in this Update are effective for fiscal years beginning after December 15, 2016,
and interim periods within fiscal years beginning after December 15, 2017. The
adoption of this Statement is not expected to have a material effect on the
Company`s financial position or results of operations.
ASU 2015-14, Revenue From Contracts
With Customers (Topic 606), Deferral of the Effective Date
The FASB and IASB have deferred the
effective date of following amendment for all entities by one year.
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:
7
IntelGenx Technologies Corp.
|
|
Notes to Consolidated Interim Financial Statements
|
September 30, 2015 |
(Expressed in U.S. Funds) |
(Unaudited) |
3. |
Significant Accounting Policies
(Contd) |
|
|
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. |
Public business entities, certain
not-for-profit entities, and certain employee benefit plans should apply the
guidance in Update 2014-09 to annual reporting periods beginning after December
15, 2017, including interim reporting periods within that reporting period.
Earlier application is permitted only as of annual reporting periods beginning
after December 15, 2016, including interim reporting periods within that
reporting period.
All other entities should apply the
guidance in Update 2014-09 to annual reporting periods beginning after December
15, 2018, and interim reporting periods within annual reporting periods
beginning after December 15, 2019. All other entities may apply the guidance in
Update 2014-09 earlier as of an annual reporting period beginning after December
15, 2016, including interim reporting periods within that reporting period. All
other entities also may apply the guidance in Update 2014-09 earlier as of an
annual reporting period beginning after December 15, 2016, and interim reporting
periods within annual reporting periods beginning one year after the annual
reporting period in which the entity first applies the guidance in Update
2014-09.
This ASU is to be applied
retrospectively, with certain practical expedients allowed. The Company is
currently evaluating the impact of this Statement on its consolidated financial
statements.
ASU 2015-11, Inventory (Topic 330):
Simplifying the Measurement of Inventory
The amendments in this Update more
closely align the measurement of inventory in GAAP with the measurement of
inventory in International Financial Reporting Standards (IFRS). An entity
should measure inventory within the scope of this Update at the lower of cost
and net realizable value. Net realizable value is the estimated selling prices
in the ordinary course of business, less reasonably predictable costs of
completion, disposal, and transportation. Subsequent measurement is unchanged
for inventory measured using LIFO or the retail inventory method.
The Board has amended some of the other
guidance in Topic 330 to more clearly articulate the requirements for the
measurement and disclosure of inventory. However, the Board does not intend for
those clarifications to result in any changes in practice. Other than the change
in the subsequent measurement guidance from the lower of cost or market to the
lower of cost and net realizable value for inventory within the scope of this
Update, there are no other substantive changes to the guidance on measurement of
inventory.
The amendments in this Update do not
apply to inventory that is measured using last-in, first-out (LIFO) or the
retail inventory method. The amendments apply to all other inventory, which
includes inventory that is measured using first-in, first-out (FIFO) or average
cost.
8
IntelGenx Technologies Corp.
|
|
Notes to Consolidated Interim Financial Statements
|
September 30, 2015 |
(Expressed in U.S. Funds) |
(Unaudited) |
3. |
Significant Accounting Policies
(Contd) |
For public business entities, the
amendments in this Update are effective for fiscal years beginning after
December 15, 2016, including interim periods within those fiscal years. For all
other entities, the amendments in this Update are effective for fiscal years
beginning after December 15, 2016, and interim periods within fiscal years
beginning after December 15, 2017. The amendments in this Update should be
applied prospectively with earlier application permitted as of the beginning of
an interim or annual reporting period. The adoption of this Statement is not
expected to have a material effect on the Company`s financial position or
results of operations.
ASU 2015-05, Intangibles - Goodwill
and Other - Internal-Use Software (Subtopic 350-40): Customers Accounting for
Fees Paid in a Cloud Computing Arrangement
The amendments in ASU 2015-05 provide
guidance to customers about whether a cloud computing arrangement includes a
software license. If a cloud computing arrangement includes a software license,
then the customer should account for the software license element of the
arrangement consistent with the acquisition of other software licenses. If a
cloud computing arrangement does not include a software license, the customer
should account for the arrangement as a service contract. The amendments do not
change the accounting for a customers accounting for service contracts. As a
result of the amendments, all software licenses within the scope of Subtopic
350-40 will be accounted for consistent with other licenses of intangible
assets.
The amendments are effective for public
business entities for annual periods, including interim periods within those
annual periods, beginning after December 15, 2015. Early adoption is permitted.
An entity can elect to adopt the amendments either: (1) prospectively to all
arrangements entered into or materially modified after the effective date; or
(2) retrospectively. The adoption of this Statement is not expected to have a
material effect on the Company`s financial position or results of operations.
ASU 2015-04, Compensation -
Retirement Benefits (Topic 715): Practical Expedient for the Measurement Date of
an Employers Defined Benefit Obligation and Plan Assets
The amendments in ASU 2015-04 permit an
entity with a fiscal year-end that does not coincide with a month-end a
practical expedient that permits the entity to measure defined benefit plan
assets and obligations using the month-end that is closest to the entitys
fiscal year-end and apply that practical expedient consistently from year to
year. The practical expedient should be applied consistently to all plans if an
entity has more than one plan.
The amendments are effective for public
business entities for financial statements issued for fiscal years beginning
after December 15, 2015, and interim periods within those fiscal years. Earlier
adoption is permitted. The amendments should be applied prospectively. The
adoption of this Statement is not expected to have a material effect on the
Company`s financial position or results of operations.
9
IntelGenx Technologies Corp.
|
|
Notes to Consolidated Interim Financial Statements
|
September 30, 2015 |
(Expressed in U.S. Funds) |
(Unaudited) |
3. |
Significant Accounting Policies
(Contd) |
ASU 2015-03, Interest - Imputation
of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance
Costs
The amendments in ASU 2015-03 are
intended to simplify the presentation of debt issuance costs. These amendments
require that debt issuance costs related to a recognized debt liability be
presented in the balance sheet as a direct deduction from the carrying amount of
that debt liability, consistent with debt discounts. The recognition and
measurement guidance for debt issuance costs are not affected by the amendments
in this ASU.
The amendments are effective for public
business entities for financial statements issued for fiscal years beginning
after December 15, 2015, and interim periods within those fiscal years. Early
adoption is permitted for financial statements that have not been previously
issued. The adoption of this Statement is not expected to have a material effect
on the Company`s financial position or results of operations.
ASU 2015-02, Consolidation (Topic
810): Amendments to the Consolidation Analysis
The amendments in ASU 2015-02 are
intended to improve targeted areas of consolidation guidance for legal entities
such as limited partnerships, limited liability corporations, and securitization
structures. The new standard reduces the number of consolidation models and
improves current GAAP by:
-Placing more emphasis on risk of loss
when determining a controlling financial interest.
-Reducing the frequency of the
application of related-party guidance when determining a controlling financial
interest in a variable interest entity (VIE).
-Changing consolidation conclusions for
public and private companies in several industries that typically make use of
limited partnerships or VIEs.
The amendments are effective for public
business entities for fiscal years, and interim periods within those fiscal
years, beginning after December 15, 2015. Early adoption is permitted, including
adoption in an interim period. ASU 2015-02 may be applied retrospectively in
previously issued financial statements. The adoption of this Statement is not
expected to have a material effect on the Company`s financial position or
results of operations.
ASU 2015-01, Income Statement -
Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement
Presentation by Eliminating the Concept of Extraordinary Items
The amendments in ASU 2015-01 eliminate
from U.S. GAAP the concept of extraordinary items. Subtopic 225-20, Income
Statement - Extraordinary and Unusual Items, required that an entity separately
classify, present, and disclose extraordinary events and transactions. The FASB
heard from stakeholders that the concept of extraordinary items causes
uncertainty because it is unclear when an item should be considered both unusual
and infrequent. Additionally, some stakeholders said that although users find
information about unusual or infrequent events and transactions useful, they do
not find the extraordinary item classification and presentation necessary to
identify those events and transactions. Other stakeholders noted that it is
extremely rare in current practice for a transaction or event to meet the
requirements to be presented as an extraordinary item. This ASU will also align
more closely U.S. GAAP income statement presentation guidance with IAS 1,
Presentation of Financial Statements, which prohibits the presentation
and disclosure of extraordinary items. The amendments are effective for fiscal
years, and interim periods within those fiscal years, beginning after December
15, 2015. A reporting entity may apply the amendments prospectively. A reporting
entity also may apply the amendments retrospectively to all prior periods
presented in the financial statements. Early adoption is permitted provided that
the guidance is applied from the beginning of the fiscal year of adoption. The
adoption of this Statement is not expected to have a material effect on the
Company`s financial position or results of operations.
10
IntelGenx Technologies Corp.
|
|
Notes to Consolidated Interim Financial Statements
|
September 30, 2015 |
(Expressed in U.S. Funds) |
(Unaudited) |
3. |
Significant Accounting Policies
(Contd) |
ASU 2014-15, Presentation of
Financial Statements Going Concern (Subtopic 205-40): Disclosure of
Uncertainties about an Entitys Ability to Continue as a Going Concern
The FASB has issued ASU No. 2014-15
which is intended to define managements responsibility to evaluate whether
there is substantial doubt about an organizations ability to continue as a
going concern and to provide related footnote disclosures. This ASU provides
guidance to an organizations management, with principles and definitions that
are intended to reduce diversity in the timing and content of disclosures that
are commonly provided by organizations today in the financial statement
footnotes. The amendments are effective for annual periods ending after December
15, 2016, and interim periods within annual periods beginning after December 15,
2016. Early application is permitted for annual or interim reporting periods for
which the financial statements have not previously been issued. The Company is
currently evaluating the impact of this Statement on its consolidated financial
statements.
ASU 2014-13, Consolidation (Topic
810): Measuring the Financial Assets and the Financial Liabilities of a
Consolidated Collateralized Financing Entity
The FASB has issued ASU No. 2014-13
which will apply to a reporting entity that is required to consolidate a
collateralized financing entity under the Variable Interest Entities guidance.
The fair value of the financial assets of a collateralized financing entity, as
determined under GAAP, may differ from the fair value of its financial
liabilities even when the financial liabilities have recourse only to the
financial assets. Before this ASU, there was no specific guidance in GAAP on how
a reporting entity should account for that difference. The amendments in this
ASU provide an alternative to Topic 820, Fair Value Measurement, for measuring
the financial assets and the financial liabilities of a consolidated
collateralized financing entity to eliminate that difference. The amendments in
this ASU are effective for public business entities for annual periods, and
interim periods within those annual periods, beginning after December 15, 2015.
Early adoption is permitted as of the beginning of an annual period. The
adoption of this Statement is not expected to have a material effect on the
Company`s financial position or results of operations.
11
IntelGenx Technologies Corp.
|
|
Notes to Consolidated Interim Financial Statements
|
September 30, 2015 |
(Expressed in U.S. Funds) |
(Unaudited) |
3. |
Significant Accounting Policies
(Contd) |
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 this Statement is not expected to have a material
effect on the Company`s financial position or results of operations.
As of September 30, 2015 NDA
acquisition costs of $6 thousand (December 31, 2014 - $46 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.
The Company's credit facility is
subject to review annually and consists of an operating demand line of credit of
up to CAD$250 thousand and corporate credits cards of up to CAD$55 thousand.
Borrowings under the operating demand line of credit bear interest at the Banks
prime lending rate plus 2%. The credit facility and term loan (see note 7) are
secured by a first ranking movable hypothec on all present and future movable
property of the Company and a 50% guarantee by Export Development Canada, a
Canadian Crown corporation export credit agency. The terms of the banking
agreement require the Company to comply with certain debt service coverage and
debt to net worth financial covenants on an annual basis at the end of the
Companys fiscal year. As at September 30, 2015, the Company has not drawn on
its credit facility.
12
IntelGenx Technologies Corp.
|
|
Notes to Consolidated Interim Financial Statements
|
September 30, 2015 |
(Expressed in U.S. Funds) |
(Unaudited) |
6. |
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.
Pursuant to the execution of a
licensing agreement for Forfivo XL®, IntelGenx received an upfront fee from
Edgemont Pharmaceuticals (Edgemont) in the first quarter of 2012, which
IntelGenx 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 the fourth quarter of 2014, Edgemont
exercised its right to extend the license for the exclusive marketing of Forfivo
XL®. In accordance with the terms for exercising such right, IntelGenx invoiced
$1.25 million to Edgemont and recognized the full amount as deferred revenue,
which was recognized as revenue from October 2014 through September 2015.
As a result of this policy, IntelGenx
has a deferred revenue balance of $76 thousand at September 30, 2015 (December
31, 2014 - $1,245 thousand) that has not been recognized as revenue.
The Companys term loan facility
consists of CAD$492 thousand bearing interest at the Banks prime lending rate
plus 2.50%, and CAD$3 million bearing interest at a fixed rate to be determined
at drawdown. The term loan is subject to the same security and financial
covenants as the bank indebtedness (see note 5).
The CAD$3 million tranche of the term
loan will be disbursed subsequent to meeting certain conditions. There is a
moratorium on capital repayments for the first 6 months of each drawdown, at
which point the term loan will be repayable in monthly instalments over 60
months.
|
|
|
September 30, 2015 |
|
|
September 30, 2014 |
|
|
(in U.S. $ thousands) |
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
Term loan |
|
368 |
|
|
0 |
|
|
|
|
|
|
|
|
|
|
Current portion |
|
74 |
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
294 |
|
|
0 |
|
13
IntelGenx Technologies Corp.
|
|
Notes to Consolidated Interim Financial Statements
|
September 30, 2015 |
(Expressed in U.S. Funds) |
(Unaudited) |
Principal repayments due in each of the
next five years are as follows:
|
(in U.S. $ thousands) |
|
|
|
|
2015 |
$ |
18 |
|
|
2016 |
|
75 |
|
|
2017 |
|
75 |
|
|
2018 |
|
75 |
|
|
2019 |
|
75 |
|
|
Thereafter |
|
50 |
|
|
|
September 30, |
|
|
December 31, |
|
|
|
2015 |
|
|
2014 |
|
Authorized - |
|
|
|
|
|
|
100,000,000 common shares of $0.00001 par
value |
|
|
|
|
|
|
20,000,000 preferred
shares of $0.00001 par value |
|
|
|
|
|
|
Issued - 63,615,255 (December 31, 2014 - 63,465,255)
common shares |
$ |
636 |
|
$ |
635 |
|
9. |
Additional Paid-In Capital |
Stock options
During the nine month period ended
September 30, 2015 a total of 150,000 stock options were exercised for 150,000
common shares having a par value of $0 thousand in aggregate, for cash
consideration of $62 thousand, resulting in an increase in additional paid-in
capital of $62 thousand.
Compensation expenses for stock-based
compensation of $105 thousand and $82 thousand were recorded during the nine
month periods ended September 30, 2015 and 2014 respectively. The entire amounts
expensed in 2015 and 2014 relate to stock options granted to employees and
directors. As at September 30, 2015 the Company has $159 thousand (2014 - $56
thousand) of unrecognized stock-based compensation.
14
IntelGenx Technologies Corp.
|
|
Notes to Consolidated Interim Financial Statements
|
September 30, 2015 |
(Expressed in U.S. Funds) |
(Unaudited) |
9. |
Additional Paid-In Capital
(Contd) |
Warrants
No warrants were exercised during the
nine month period ended September 30, 2015. During the nine month period ended
September 30, 2014 a total of 2,480,988 warrants were exercised for 2,480,988
common shares having a par value of $0 thousand in aggregate, for cash
consideration of $1,619 thousand, resulting in an increase in additional paid-in
capital of $1,619 thousand.
Income taxes reported differ from the
amount computed by applying the statutory rates to net income. The reasons are
as follows:
|
|
For the
Three-Month Period |
|
|
For the
Nine-Month Period |
|
|
|
Ended September 30, |
|
|
|
|
|
Ended September
30, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in U.S. $ thousands) |
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
Statutory income taxes |
$ |
393 |
|
|
($117 |
) |
$ |
305 |
|
|
($401 |
) |
Net operating losses for which no tax
benefits have been recorded |
|
0 |
|
|
13 |
|
|
0 |
|
|
169 |
|
Net operating losses of prior
years applied against current period |
|
(450 |
) |
|
0 |
|
|
(484 |
) |
|
0 |
|
Excess of depreciation over capital cost
allowance |
|
6 |
|
|
2 |
|
|
7 |
|
|
2 |
|
Non-deductible expenses |
|
7 |
|
|
5 |
|
|
28 |
|
|
22 |
|
Undeducted research and development expenses |
|
44 |
|
|
97 |
|
|
144 |
|
|
208 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
0 |
|
$ |
0 |
|
$ |
0 |
|
$ |
0 |
|
As at December 31, 2014, management
determined that enough uncertainty existed relative to the realization of the
deferred income tax asset balances to warrant the application of a full
valuation allowance. Although management believes that certain of the net
operating losses will be applied against earnings in 2015, management continues
to believe that enough uncertainty exists relative to the realization of the
remaining deferred income tax asset balances such that no recognition of
deferred income tax assets is warranted.
15
IntelGenx Technologies Corp.
|
|
Notes to Consolidated Interim Financial Statements
|
September 30, 2015 |
(Expressed in U.S. Funds) |
(Unaudited) |
11. |
Related Party Transactions |
Included in management salaries are $1
thousand (2014 - $30 thousand) for options granted to the Chief Executive
Officer, $6 thousand (2014: Nil) for options granted to the VP Operations and
$25 thousand (2014 - $33 thousand) for options granted to the Chief Financial
Officer. Also included are $61 thousand (2014 - $11 thousand) for options
granted to non-employee directors. All options were granted under the 2006 Stock
Option Plan.
Also included in management salaries
are director fees of $198 thousand (2014 - $139 thousand).
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.
12. |
Basic and Diluted Earnings (Loss) Per Common
Share |
Basic and diluted earnings (loss) per
common share is calculated based on the weighted average number of shares
outstanding during the period. Common equivalent shares from stock options and
warrants are also included in the diluted per share calculations unless the
effect of the inclusion would be antidilutive.
16
Item 2: Managements Discussion and Analysis of Financial
Condition and Results of Operations
Introduction to Managements Discussion and Analysis
This Managements Discussion and Analysis of Financial
Condition and Results of Operations (MD&A) comments on our business
operations, performance, financial position and other matters for the three
months and nine months ended September 30, 2015 and 2014.
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 MD&A should be read in conjunction with the
accompanying unaudited Consolidated Financial Statements and Notes thereto. We
also encourage you to refer to Companys MD&A for the year ended December
31, 2014, as updated by our MD&A for the first and second quarter of 2015.
In preparing this MD&A, we have taken into account information available to
us up to October [28], 2015, the date of this MD&A, unless otherwise
indicated.
Additional information relating to the Company, including our
Annual Report on Form 10-K for the fiscal year ended December 31, 2014 (the
2014 Form 10-K), is available on SEDAR at www.sedar.com and on the U.S.
Securities and Exchange Commission (the SEC) website at www.sec.gov.
All dollar amounts are expressed in U.S. dollars, unless
otherwise noted.
Cautionary Statement Concerning Forward-Looking Statements
Certain statements included or incorporated by reference in
this MD&A constitute forward-looking statements within the meaning of
applicable securities laws. All statements contained in this MD&A that are
not clearly historical in nature are forward-looking, and the words
anticipate, believe, continue, expect, estimate, intend, may,
plan, will, shall and other similar expressions are generally intended to
identify forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
All forward-looking statements are based on our beliefs and assumptions based on
information available at the time the assumption was made. These forward-looking
statements are not based on historical facts but on managements expectations
regarding future growth, results of operations, performance, future capital and
other expenditures (including the amount, nature and sources of funding
thereof), competitive advantages, business prospects and opportunities.
Forward-looking statements involve significant known and unknown risks,
uncertainties, assumptions and other factors that may cause our actual results,
levels of activity, performance or achievements to differ materially from those
implied by forward-looking statements. These factors should be considered
carefully and you should not place undue reliance on the forward-looking
statements. Although the forward-looking statements contained in this MD&A
or incorporated by reference herein are based upon what management believes to
be reasonable assumptions, there is no assurance that actual results will be
consistent with these forward-looking statements. These forward-looking
statements are made as of the date of this MD&A or as of the date specified
in the documents incorporated by reference herein, as the case may be. We
undertake no obligation to update any forwardlooking statements to reflect
events or circumstances after the date on which such statements were made or to
reflect the occurrence of unanticipated events, except as may be required by
applicable securities laws. The factors set forth in Item 1A., "Risk
Factors" of the 2014 Form 10-K, as well as any cautionary language in this
MD&A, provide examples of risks, uncertainties and events that may cause our
actual results to differ materially from the expectations we describe in our
forward-looking statements. Before you invest in the common stock, you should be
aware that the occurrence of the events described as risk factors and elsewhere
in this report could have a material adverse effect on our business, operating
results and financial condition.
17
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 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 continue to develop the existing products in our pipeline
and may also perform research and development on other potential products as
opportunities arise.
We are in the process of establishing a state-of-the-art
manufacturing facility for the future manufacturing of our VersaFilm products
as we believe that this:
|
1) |
represents a profitable business opportunity, |
|
2) |
will reduce our dependency upon third-party contract
manufacturers, thereby better protecting our manufacturing process
know-how and intellectual property, and |
|
3) |
allows us to offer our clients and development partners a
full service from product conception through to supply of the finished
product. |
As previously announced, we plan to finance the project from
cash in hand and a government-backed bank financing of up to CAD$3.5 million
with a Canadian chartered bank.
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 VersaFilm
manufacturing capability, and increase our research and development activities.
Key developments
Product-related
Anti-depressant tablet, Forfivo
XL®
In Q2 2015, we provided an update on sales and marketing
activities for Forfivo XL®, our first FDA-approved product that was launched in
the USA in October 2012 under an exclusive commercialization agreement with
Edgemont Pharmaceuticals LLC ("Edgemont").
18
According to Symphony Health Solutions, gross sales of Forfivo
XL® totaled $8.9 million in the year ending December 31st, 2014, compared with
sales of $2.7 million in the preceding year. The number of Forfivo XL®
prescriptions filled increased from approximately 16,761 in 2013 to 30,378 in
2014. The average month-on-month growth rate of Forfivo XL® throughout 2014
exceeded 9%.
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. The active ingredient in Forfivo
XL® is bupropion, the same active ingredient used in the well-known
antidepressant product: Wellbutrin XL®.
Corporate
New Manufacturing and Laboratory Facilities with
increased R&D and Administration space
On April 24, 2015 we entered into an agreement to lease
approximately 17,000 square feet in a property located at 6420 Abrams,
St-Laurent, Quebec (the Lease). The Lease has a 10 year and 6 month term
commencing on September 1, 2015. We have retained two options to extend the
Lease, with each option being for an additional five years. Under the terms of
the Lease we will be required to pay base rent of approximately CAD$110 thousand
(approximately $87 thousand) per year. This will increase at a rate of CAD$0.25
($0.20) per square foot every two years. We plan to use the newly leased space
to manufacture our VersaFilm products, to expand our research and development
capabilities, and for administration purposes.
On April 29, 2015 we entered into an agreement for the
construction of manufacturing facilities, laboratories, and offices within the
property located at 6420 Abrams, St-Laurent, Quebec, Canada at an aggregate cost
of CAD$2.9 million (approximately $2.3 million). The construction agreement was
awarded to BTL Construction Inc. (BTL) in Quebec following a tender process
that was completed in December 2014. BTL specializes in the renovation of
existing buildings for pharmaceutical use and has completed projects for various
major pharmaceutical companies. We plan to fund this project from cash on hand.
Construction is anticipated to be completed in Q4, 2015.
On March 16, 2015 we received CAD$500 thousand (approximately
$430 thousand) in cash as part of a credit facility of up to CAD$3.5 million
(approximately $3.0 million) negotiated with a Canadian chartered bank
(Lender). The credit facility is supported by a 50% guarantee under the Export
Guarantee Program from Export Development Canada, Canadas export credit agency.
Further disbursements will be received in the fourth quarter of the current
fiscal year as well as in the first quarter of fiscal year 2016. There is a
moratorium on capital repayments for the first 6 months of each drawdown, at
which point the term loan will be repayable in monthly installments over 60
months. The credit facility may be drawn down in multiple disbursements over 12
months and, after a 6 month moratorium on the capital, has a repayment term of
up to 60 months. The financial covenants of the credit facility require us to
respect, on an annual basis, a Minimum Debt Service Coverage ratio of 1.25:1,
and a Maximum Total Debt to Tangible Net Worth ratio of 2.5:1. Based upon
Managements business forecasts and projections, Management believes that we
will be able to fully comply with these financial covenants. We intend to use
the funds for the purchase and installation of new equipment for our new,
state-of the-art, manufacturing facility.
On March 16, 2015 we placed an order for 2 packaging machines
from Harro Höfliger Verpackungsmaschinen GmbH (Harro Höfliger) and installed
in our new, state-of the-art, manufacturing facility. Harro Höfliger is widely
recognized as a leading supplier of production and packaging equipment,
primarily to the pharmaceutical and medical device industries. Our purchase
order consists of one commercial scale packaging machine and one smaller machine
for our R&D laboratories. The purchase order, in the aggregate amount of
approximately €1.5 million (approximately $1.6 million), requires immediate
payment of a 20% deposit with a further 70% to be paid upon delivery of each
machine and the balance of 10% to be paid upon satisfactory completion of a Site
Acceptance Test of each machine. The packaging machine for our R&D
laboratories is expected to be delivered in Q4, 2015. We expect the commercial
scale machine to be delivered in Q1, 2016. We intend to finance the acquisition
of these 2 machines with the credit facility negotiated with the Lender, as
discussed above.
19
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. In summary, our
financial statements for the nine month period ended September 30, 2015 report
an accumulated other comprehensive loss due to foreign currency translation
adjustments of $692 thousand due to the fluctuations in the rates used to
prepare our financial statements, $458 thousand of which negatively impacted our
comprehensive income for the nine month period ending September 30, 2015. The
following Management Discussion and Analysis takes this into consideration
whenever material.
Reconciliation of Comprehensive Income (Loss) to Adjusted
Earnings before Interest, Taxes, Depreciation and Amortization (Adjusted
EBITDA)
Adjusted EBITDA is a non-US GAAP financial measure. A
reconciliation of the Adjusted EBITDA is presented in the table below. The
Company uses adjusted financial measures to assess its operating performance.
Securities regulations require that companies caution readers that earnings and
other measures adjusted to a basis other than US-GAAP do not have standardized
meanings and are unlikely to be comparable to similar measures used by other
companies. Accordingly, they should not be considered in isolation. The Company
uses Adjusted EBITDA to measure its performance from one period to the next
without the variation caused by certain adjustments that could potentially
distort the analysis of trends in our operating performance, and because the
Company believes it provides meaningful information on the Company`s financial
condition and operating results.
IntelGenx obtains its Adjusted EBITDA measurement by adding to
comprehensive income (loss), finance income and costs, depreciation and
amortization, income taxes and foreign currency translation adjustment incurred
during the period. IntelGenx also excludes the effects of certain non-monetary
transactions recorded, such as share-based compensation, for its Adjusted EBITDA
calculation. The Company believes it is useful to exclude these items
as they are either non-cash expenses, items that cannot be influenced by
management in the short term, or items that do not impact core operating
performance. Excluding these items does not imply they are necessarily
nonrecurring. Share-based compensation costs are a component of employee and
consultants remuneration and can vary significantly with changes in the market
price of the Companys shares. Foreign currency translation adjustments are a
component of other comprehensive income and can vary significantly with currency
fluctuations from one period to another. In addition, other items that do not
impact core operating performance of the Company may vary significantly from one
period to another. As such, adjusted EBITDA provides improved continuity with
respect to the comparison of the Companys operating results over a period of
time. Our method for calculating adjusted EBITDA may differ from that used by
other corporations.
20
Reconciliation of Non-US-GAAP Financial Information
|
|
Three-month period |
|
|
Nine-month period |
|
|
|
ended September 30, |
|
|
ended September 30, |
|
In U.S.$ thousands |
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
$ |
|
$ |
$ |
|
|
|
|
|
$ |
|
Comprehensive income (loss)
|
|
1,157 |
|
|
(690 |
) |
|
566 |
|
|
(1,816 |
) |
Add (deduct): |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization |
|
16 |
|
|
17 |
|
|
48 |
|
|
51 |
|
Finance costs |
|
6 |
|
|
- |
|
|
101 |
|
|
- |
|
Finance income
|
|
(7 |
) |
|
(11 |
) |
|
(20 |
) |
|
(23 |
) |
Share-based compensation |
|
25 |
|
|
17 |
|
|
105 |
|
|
82 |
|
Foreign currency
translation adjustment |
|
195 |
|
|
256 |
|
|
458 |
|
|
326 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
1,392 |
|
|
(411 |
) |
|
1,258 |
|
|
(1,380 |
) |
Adjusted Earnings before Interest, Taxes, Depreciation and
Amortization (Adjusted EBITDA)
Adjusted EBITDA increased by $1,803 for the three-month period
ended September 30, 2015 to $1,392 compared to negative ($411) for the
three-month period ended September 30, 2014. Adjusted EBITDA increased by $2,638
for the nine-month period ended September 30, 2015 to $1,258 compared to
negative ($1,380) for the nine-month period ended September 30, 2014. The
increase in Adjusted EBITDA of $1,803 for the three-month period ended September
30, 2015 is mainly attributable to an increase in comprehensive income of $1,847
partially offset by a decrease of the foreign currency translation adjustment of
$61. The increase in Adjusted EBITDA of $2,638 for the nine-month period ended
September 30, 2015 is mainly attributable to an increase in comprehensive income
of $2,382 as well as an increase of the foreign currency translation adjustment
of $132.
Results of operations for the three month and nine month
periods ended September 30, 2015 compared with the three month and nine month
periods ended September 30, 2014.
|
|
Three-month
period |
|
|
Nine-month
period ended |
|
|
|
ended
September 30, |
|
|
September
30, |
|
In U.S.$ thousands |
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
Revenue |
$ |
2,383 |
|
$ |
452 |
|
$ |
3,593 |
|
$ |
834 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Royalty and License
Revenue |
|
189 |
|
|
- |
|
|
292 |
|
|
- |
|
Research and Development Expenses |
|
274 |
|
|
359 |
|
|
643 |
|
|
772 |
|
Selling, General and
Administrative Expenses |
|
553 |
|
|
521 |
|
|
1,505 |
|
|
1,524 |
|
Depreciation of tangible
assets |
|
6 |
|
|
11 |
|
|
19 |
|
|
25 |
|
Amortization of intangible assets |
|
10 |
|
|
6 |
|
|
29 |
|
|
26 |
|
Operating Income
(Loss) |
|
1,351 |
|
|
(445 |
) |
|
1,105 |
|
|
(1,513 |
) |
Net Income (Loss) |
|
1,352 |
|
|
(434 |
) |
|
1,024 |
|
|
(1,490 |
) |
Comprehensive Income
(Loss) |
|
1,157 |
|
|
(690 |
) |
|
566 |
|
|
(1,816 |
)
|
21
Revenue
Total revenues for the three month period ended September 30,
2015 amounted to $2,383 thousand, representing an increase of $1,931 thousand or
427% compared to $452 thousand for the three month period ended September 30,
2014. Total revenues for the nine month period ended September 30, 2015 amounted
to $3,593 thousand representing an increase of $2,759 thousand or 331% compared
to $834 thousand for the nine month period ended September 30, 2014. The
increases for the three month and nine month periods ended September 30, 2015
compared to the last years corresponding periods are mainly attributable to the
one-time milestone payment of $3 million from IntelGenx licensing partner
Edgemont triggered by Edgemont reaching in July 2015, $7 million of cumulative
net trade sales of Forfivo XL® over the preceding 12 months. From that $3
million milestone payment, $1 million was received in the current quarter and
the $2 million balance will be received in Q1 2016. Nevertheless, 2/6 of the $2
million was recognized as revenue in the quarter ended September 30, 2015.
The level of sales achieved for Forfivo XL® continues to
improve significantly. According to Edgemont Pharmaceuticals, net sales of
Forfivo XL® totaled $2.5 million in the quarter ending September 30, 2015
compared to $2.1 million in the second quarter of 2015, representing an increase
of 16%. For the past nine months, net sales of Forfivo XL® totaled $6.3 million
($12 million gross), an increase of 117% compared to the nine month period in
2014.
Management expects the sales trend to continue in the fourth quarter.
We expect sales of Forfivo XL® to continue this growth trend
for the foreseeable future given that the settlement of the Paragraph IV
litigation with Wockhardt Bio AG in November 2014 should prevent the entry of
generic competition into the marketplace until early 2018.
Cost of royalty and license revenue
We recorded $189 thousand for the cost of royalty and license
revenue in the three month period ended September 30, 2015 compared with $Nil in
the same period of 2014. We recorded $292 thousand for the cost of royalty and
license revenue in the nine month period ended September 30, 2015 compared with
$Nil in the same period of 2014. These expenses relate to a Project Transfer
Agreement that was executed in May 2010 with one of our former development
partners whereby we acquired full rights to, and ownership of, Forfivo XL®, our
novel, high strength formulation of Bupropion hydrochloride, the active
ingredient in Wellbutrin XL®. Pursuant to the Project Transfer Agreement, and
following commercial launch of Forfivo XL® in October 2012, we are required,
after recovering an aggregate $200 thousand for management fees previously paid,
to pay our former development partner 10% of net income received from the sale
of Forfivo XL®. We recovered the final portion of the management fees in
December 2014, thereby invoking payments to our former development partner.
Research and development (R&D) expenses
R&D expenses for the three month period ended September 30,
2015 amounted to $274 thousand, representing a decrease of $85 thousand or 24%,
compared to $359 thousand for the three month period ended September 30, 2014.
R&D expenses for the nine month period ended September 30, 2015 amounted to
$643 thousand, representing a decrease of $129 thousand or 17%, compared to $772
thousand recorded in the same period of 2014. The decrease is mainly due to the
difference in the currency exchange rate compared to 2014 since almost all of
our R&D expenses are in Canadian Dollars.
Included within R&D expenses for the first three months of
2015 are R&D Salaries of $110 thousand, laboratory supply of $112 thousand,
clinical studies of $27 thousand and patent expenses of $27 thousand. This
compares to R&D salaries of $89 thousand in the first three months of 2014,
clinical studies of $120 thousand and manufacturing batches of $126 thousand.
Included within R&D expenses for the first nine months of 2015 are R&D
Salaries of $339 thousand, laboratory supply of $138 thousand, clinical studies
of $86 thousand and patent expenses of $115 thousand. This compares to R&D
salaries of $323 thousand in the nine months of 2014, clinical studies of $228
thousand and manufacturing batches of $126 thousand.
22
In the nine months ended September 30, 2015 we recorded
estimated Research and Development Tax Credits and refunds of $71 thousand,
compared with $63 thousand that was recorded in the same period of the previous
year.
Selling, general and administrative (SG&A) expenses
SG&A expenses for the three month period ended September
30, 2015 amounted to $553 thousand, representing a slight increase of $32
thousand or 6%, compared to $521 thousand for the three month period ended
September 30, 2014. SG&A expenses for the nine month period ended September
30, 2015 amounted to $1,505 thousand, representing a slight decrease of $19
thousand or 1%, compared to $1,524 thousand recorded in the same period of 2014.
Depreciation of tangible assets
In the three month period ended September 30, 2015 we recorded
an expense of $6 thousand for the depreciation of tangible assets, compared with
an expense of $11 thousand for the same period of the previous year. In the nine
month period ended September 30, 2015 we recorded an expense of $19 thousand for
the depreciation of tangible assets, compared with an expense of $25 thousand
for the same period of the previous year
Amortization of intangible assets
The amortization of intangible assets expense for the three
month period ended September 30, 2015 amounted to $10 thousand, compared to $6
thousand in the same period of last year. The amortization of intangible assets
expense for the nine month period ended September 30, 2015 amounted to $29
thousand, compared to $26 thousand in the same period of last year. This 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 warrants and share-based payments
expense for the three month period ended September 30, 2015 amounted to $25
thousand compared to $17 thousand for the three month period ended September 30,
2014. Share-based compensation warrants and share-based payments expense for the
nine month period ended September 30, 2015 amounted to $105 thousand compared to
$82 thousand for the nine month period ended September 30, 2014
We expensed approximately $44 thousand in the first nine months
of 2015 for options granted to our employees in 2013, 2014 and 2015 under the
2006 Stock Option Plan, and approximately $61 thousand for options granted to
non-employee directors in 2013, 2014 and 2015, compared with $71 thousand and
$11 respectively that was expensed in the same period of the previous year.
There remains approximately $159 thousand in stock based
compensation to be expensed in fiscal 2015, 2016 and 2017, all of which relates
to the issuance of options to our employees and directors during 2013 to
2015.
We anticipate the issuance of additional options and warrants
in the future, which will continue to result in stock-based compensation
expense.
23
Key items from the balance sheet
|
|
|
|
|
|
|
|
|
|
|
Percentage |
|
|
|
September |
|
|
December |
|
|
Increase/ |
|
|
Increase/ |
|
In U.S.$ thousands |
|
30, 2015 |
|
|
31, 2014 |
|
|
(Decrease) |
|
|
(Decrease) |
|
Current Assets |
$ |
3,283 |
|
$ |
5,255 |
|
$ |
-1,972 |
|
|
-38% |
|
Leasehold improvements and Equipment |
|
3,576 |
|
|
983 |
|
|
2,593 |
|
|
264% |
|
Intangible Assets |
|
6 |
|
|
46 |
|
|
-40 |
|
|
-87% |
|
Security Deposit |
|
225 |
|
|
- |
|
|
225 |
|
|
N/A |
|
Current Liabilities |
|
1,340 |
|
|
466 |
|
|
874 |
|
|
188% |
|
Deferred License Revenue |
|
76 |
|
|
1,245 |
|
|
-1,169 |
|
|
-94% |
|
Term Loan |
|
368 |
|
|
- |
|
|
368 |
|
|
N/A |
|
Capital Stock |
|
1 |
|
|
1 |
|
|
0 |
|
|
0% |
|
Additional Paid-in-Capital
|
|
22,821 |
|
|
22,654 |
|
|
167 |
|
|
1% |
|
Current assets
Current assets totaled $3,283 thousand at September 30, 2015
compared with $5,255 thousand at December 31, 2014. The decrease of $1,972
thousand is mainly attributable to a decrease in cash and cash equivalents of
approximately $2,135 thousand, partially counterbalanced by an increase in
accounts receivable of approximately $226 thousand.
Cash and cash equivalents
Cash and cash equivalents totaled $2,264 thousand as at
September 30, 2015 representing a decrease of $2,135 thousand compared with the
balance of $4,399 thousand as at December 31, 2014. The decrease in cash on hand
relates to net cash used in investing activities of $2,646 thousand as well an
unrealized foreign exchange loss of $433 thousand, partially offset by net cash
provided by operating activities of $494 thousand as well as net cash provided
by financing activities of $450 thousand.
The cash provided by financing activities derives from the
first tranche of a term loan in the amount of CAD$500 thousand negotiated with
the Lender secured by a first ranking movable hypothec on all present and future
movable property of the Company and a 50% guarantee by Export Development
Canada, a Canadian Crown corporation export credit agency. Further disbursements
will be received in the fourth quarter of the current fiscal year as well as in
the first quarter of fiscal year 2016. There is a moratorium on capital
repayments for the first 6 months of each drawdown, at which point the term loan
will be repayable in monthly instalments over 60 months.
Accounts receivable
Accounts receivable totaled $878 thousand as at September 30,
2015 representing an increase of $226 thousand compared with the balance of $652
thousand as at December 31, 2014. The main reason for the increase is related to
the recognition in Q3 of 2/6 of the Edgemont $2 million milestone payment due in
Q1 2016.
24
Prepaid expenses
As at September 30, 2015 prepaid expenses totaled $74 thousand
compared with $96 thousand as of December 31, 2014. The decrease in prepaid
expenses is attributable to the advance payment in December 2014 of certain
expenses that related to services provided in the first nine months of 2015.
Investment tax credits receivable
R&D investment tax credits receivable totaled approximately
$67 thousand as at September 30, 2015 compared with $108 thousand as at December
31, 2014. The decrease relates to the accrual estimated and recorded for the
nine months of 2015.
Leasehold improvements and equipment
As at September 30, 2015, the net book value of leasehold
improvements and equipment amounted to $3,576 thousand, compared to $983
thousand at December 31, 2014. In the nine period ended September 30, 2015
additions to assets totaled $2,646 thousand and comprised of $604 thousand for
manufacturing and packaging equipment required for our new, state-of-the-art,
VersaFilm manufacturing facility, and $1,957 thousand for leasehold
improvements related to our new manufacturing facility at 6420 Abrams,
St-Laurent, Quebec, Canada.
Intangible assets
As at September 30, 2015 NDA acquisition costs of $6 thousand
(December 31, 2014 - $46 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.
Security deposit
A security deposit in the amount of CAD$300 thousand ($225
thousand) in respect of an agreement to lease approximately 17,000 square feet
in a property located at 6420 Abrams, St-Laurent, Quebec, Canada was recorded as
at September 30, 2015.
Accounts payable and accrued liabilities
Accounts payable and accrued liabilities totaled $1,340
thousand as at September 30, 2015 (December 31, 2014 - $466 thousand) and
include mainly, approximately $895 thousand related to our new facility located
at 6420 Abrams, St-Laurent, Quebec, Canada $127 thousand related to legal and
professional fees, $90 thousand in accrued payroll and $67 thousand in accrued
royalties.
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.
In the fourth quarter of 2014, Edgemont exercised its right to
extend the license for the exclusive marketing of Forfivo XL®. In accordance
with the terms for exercising such right, IntelGenx invoiced $1.25 million to
Edgemont and recognized the full amount as deferred revenue, which was
recognized as revenue from October 2014 through September 2015.
25
As a result of this policy, we have a deferred revenue balance
of $76 thousand at September 30, 2015 (December 31, 2014: $1,245 thousand) that
has not been recognized as revenue.
Shareholders equity
As at September 30, 2015 we had accumulated a deficit of
$16,824 thousand compared with an accumulated deficit of $17,848 thousand as at
December 31, 2014. Total assets amounted to $7,090 thousand and shareholders
equity totaled $5,306 thousand as at September 30, 2015, compared with total
assets and shareholders equity of $6,284 thousand and $4,573 thousand
respectively, as at December 31, 2014.
Capital stock
As at September 30, 2015 capital stock amounted to $636
(December 31, 2014: $635). 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 $22,821 thousand as at
September 30, 2015, as compared to $22,654 thousand at December 31, 2014.
Additional paid in capital increased by $167 thousand for stock based
compensation, $105 thousand is attributable to the amortization of stock options
granted to employees and directors and $62 thousand is due to the exercise of
stock option.
Taxation
As at December 31, 2014, the date of our latest annual tax
return, we had Canadian and provincial net operating losses of approximately
$9,530 thousand (December 31, 2013: $8,874 thousand) and $9,683 thousand
(December 31, 2013: $9,040 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 2034. A portion of the
net operating losses may expire before they can be utilized.
As at December 31, 2014, we had non refundable tax credits of
$1,100 thousand (December 31, 2013: $1,098 thousand) of which $20 thousand is
expiring in 2017, $194 thousand is expiring in 2018, $170 thousand is expiring
in 2019, $145 thousand is expiring in 2020, $154 thousand is expiring in 2021,
$193 thousand is expiring in 2022 and $129 thousand is expiring in 2023 and $95
thousand is expiring in 2024. We also had un-deducted research and development
expenses of $4,805 thousand (December 31, 2013: $4,354 thousand) with no
expiration date.
The deferred tax benefit of these items was not recognized in
the accounts as it has been fully provided for.
26
Key items from the statement of cash flows
|
|
|
|
|
|
|
|
|
|
|
Percentage |
|
|
|
September |
|
|
September |
|
|
Increase/ |
|
|
Increase/ |
|
In U.S.$ thousands |
|
30, 2015 |
|
|
30, 2014 |
|
|
(Decrease) |
|
|
(Decrease) |
|
Operating Activities |
$ |
494 |
|
$ |
(1,679 |
) |
$ |
2,173 |
|
|
129% |
|
Financing Activities |
|
450 |
|
|
1,619 |
|
|
(1,169 |
) |
|
(72% |
) |
Investing Activities |
|
(2,646 |
) |
|
(274 |
) |
|
(2,372 |
) |
|
(867% |
) |
Cash and cash equivalents - end of period |
|
2,264 |
|
|
4,376 |
|
|
(2,112 |
) |
|
(48% |
)
|
Statement of cash flows
Net cash provided by operating activities was $494 thousand for
the nine months ended September 30, 2015, compared to ($1,679) thousand for the
nine months ended September 30, 2014. In the nine months of 2015, net cash used
by operating activities consisted of a net income of $1,024 thousand (2014:
($1,490) thousand) and a decrease in non-cash operating elements of working
capital of ($683) thousand compared with a decrease of ($322) thousand in the
first nine months of 2014.
The net cash provided by financing activities was $450 thousand
in the first nine months of 2015, compared to $1,619 thousand provided in the
same period of the previous year. The net cash provided in the first nine months
of 2015 derives from the first tranche of a term loan in the amount of CAD$500
thousand negotiated with BMO Bank othe Lender, whereas the net cash provided in
the first six months of 2014 resulted from the exercise of warrants.
Net cash used in investing activities amounted to ($2,646)
thousand in the nine months ended September 30, 2015 compared to ($274) thousand
in the same period of 2014. The net cash used in investing activities in the
first nine months of 2015 relates exclusively to the purchase of fixed assets
and comprised $604 thousand for manufacturing and packaging equipment required
for our new, state-of-the-art, VersaFilm manufacturing facility, and $1,957
thousand for leasehold improvements related to our new manufacturing facility at
6420 Abrams, St-Laurent, Quebec.
The balance of cash and cash equivalents as at September 30,
2015 amounted to $2,264 thousand, compared to $4,376 thousand at September 30,
2014.
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.
27
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.
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: November 3, 2015 |
By: |
/s/ Horst G. Zerbe |
|
|
|
|
|
Horst G. Zerbe |
|
|
President, C.E.O. and |
|
|
Director |
Date: November 3, 2015 |
By: |
/s/ Andre Godin |
|
|
Andre Godin |
|
|
Principal Accounting Officer
|
28
Exhibit 31.1
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY
ACT OF 2002
I, Horst G. Zerbe, 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: November 3, 2015 |
/s/
Horst G. Zerbe |
|
Horst G. Zerbe |
|
Chief Executive Officer
|
Exhibit 31.2
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY
ACT OF 2002
I, Andre Godin, 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: November 3, 2015
/s/ Andre Godin
|
Andre Godin |
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 September 30, 2015, as filed with the Securities and Exchange
Commission on the date hereof (the "Report"), I, Horst G. Zerbe, 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 |
Chief Executive Officer |
November 3, 2015 |
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 September 30, 2015, as filed with the Securities and Exchange
Commission on the date hereof (the "Report"), I, Andre Godin, 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/ Andre
Godin |
Andre Godin |
Principal Accounting Officer |
November 3, 2015 |
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.
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