IGX Intelgenx Technologies Corp

IntelGenx Technologies Corp. (TSX:IGX) (OTCQB:IGXT) (“IntelGenx” or the “Company”) announces the closing of the first tranche of a non-brokered private placement (the “Offering”) of units (“Units”) from atai Life Sciences AG (“atai”) for aggregate gross proceeds of approximately US$3 million, including US$750,000 to be received by the Company pursuant to the Subsequent atai Subscription (as defined below) once the Shareholder Approvals (as defined below) have been obtained.

Pursuant to the Offering, (i) United States subscribers can subscribe for Units (the “US Units”) at a price of US$1,000 per US Unit, each US Unit being comprised of a US$1,000 principal amount convertible promissory note (the “US Notes”) and 5,405 common stock purchase warrants (the “US Warrants”); and (ii) Canadian and other subscribers located outside the United States can subscribe for Units (the “Cdn Units”) at a price of C$1,000 per Cdn Unit, each Cdn Unit being comprised of a C$1,000 principal amount convertible promissory note (the “Cdn Notes” and, together with the US Notes, the “Notes”) and 4,000 common stock purchase warrants (the “Cdn Warrants” and, together with the US Warrants, the “Warrants”).

The US Notes and Cdn Notes are convertible into shares of common stock of the Company (the “Shares”) at the option of the holder at a price of US$0.185 (the “US Conversion Price”) and C$0.25 per Share, respectively, at anytime from the date that is six (6) months following their issuance up to and including August 31, 2026, and bear interest at 12% per annum, payable quarterly, in arrears, with first payment due September 30, 2023 and every 3 months thereafter. The US Warrants and the Cdn Warrants entitle the holders thereof to purchase Shares at a price of US$0.26 and C$0.35 per Share, respectively, for a period of 3 years following their issuance.

atai, a significant shareholder and partner of the Company, subscribed, on the date hereof, for 2,220 US Units for aggregate gross proceeds to the Company of US$2,220,000 (the “Initial atai Proceeds”). In addition, atai committed to subscribe for an additional 750 US Units for additional aggregate proceeds to the Company of US$750,000 (collectively with the Initial atai Proceeds, the “atai Proceeds”) on the same terms (the “Subsequent atai Subscription”), subject to the Company obtaining the Shareholder Approvals (as defined below).

IntelGenx may complete one or more additional closings of the Offering, up to the sum of US$2,970,000 and C$1,400,000 in aggregate gross proceeds (inclusive of the atai Proceeds), before October 13, 2023, and intends to use the proceeds of the Offering to fund the Company’s wholly-owned Canadian subsidiary, continuing formulation and development efforts related to ongoing collaborations between IGXT and atai as well as working capital and expenses related to the Offering.

All securities issued in connection with the Offering, including Shares issuable pursuant to the conversion of the Notes or exercise of the Warrants, are subject to a 6-month hold period, during which time trading in the securities is restricted in accordance with applicable securities laws.

The Toronto Stock Exchange (the “TSX”) has conditionally approved the Offering and the listing of the Shares, subject to the General Cap and the Insider Cap (each as defined below). The Offering and the listing of the Shares issuable in connection with the Offering, including Shares issuable pursuant to the conversion of the Notes or exercise of the Warrants, subject to the General Cap and Insider Cap, are subject to final approval of the TSX upon satisfaction of customary closing conditions.

Amendment to the Amended and Restated Loan Agreement

On August 31, 2023, the Corporation entered into an amending agreement (the “Amending Agreement”) in respect of the amended and restated loan agreement dated as of September 14, 2021 (the “Loan Agreement”) between the Corporation, as borrower, and atai, as lender pursuant to which, among other things, the maturity date of the Loan Agreement was extended from January 5, 2024 to January 5, 2025, and the Corporation granted additional security to atai over any non-licensed intellectual property of the Corporation (the “Loan Amendment”).

The Corporation and atai also agreed, subject to obtaining TSX approval, to enter into a second amendment to the Loan Agreement (the “Second Amendment”) to provide, among other things, for the ability for atai to convert the principal and accrued interest outstanding under the Loan Agreement into Shares at the US Conversion Price (the “Conversion Feature”). Assuming the Second Amendment is entered into between the Company and atai prior to the Shareholder Approvals being obtained (as defined below), the Second Amendment will include the same “blocker” provisions as those included in the Notes and the Warrants (see below “Shareholder Approvals”).

Call Option

The Corporation and atai agreed, subject to obtaining TSX approval and the Shareholder Approvals (as defined below), to enter into an amendment (the “Subscription Agreement Amendment”) to the subscription agreement entered into by and between the Company and atai in connection with the Offering to provide atai with the right (the “Call Option”) to purchase up to an additional 6,013 US Units (the “Call Option Units”) at any time prior to August 31, 2026. The Call Option Units, to the extent atai exercises the Call Option in whole or in part, will be issued on the same terms as the US Units, including with respect to the US Conversion Price, maturity date, interest rate and the number of warrants issued in connection therewith. The Subscription Agreement Amendment will provide that the issuance of any Call Option Units will result in a corresponding reduction in atai’s remaining purchase right pursuant to the amended and restated securities purchase agreement dated May 14, 2021, which such right to be reduced by the number of Shares issuable upon the conversion of the principal amount outstanding under such issued Call Option Units.

Shareholder Approvals

The Notes and the Warrants include “blocker” provisions to ensure that, unless securityholder approval is obtained in accordance with the rules of the TSX, (i) the aggregate number of Shares issuable in connection with the Offering (upon conversion of the Notes, exercise of the Warrants and/or the payment of interest on the Notes in Shares, as the case may be) is limited to 43,664,524 Shares, which equals 24.99% of the issued and outstanding Shares (on a non-diluted basis) as of the date hereof (the “General Cap”), and (ii) the aggregate number of Shares that may be issued to “insiders” of the Company (as such term is defined in the policies of the TSX) pursuant to the Offering (upon conversion of the Notes, exercise of the Warrants and/or the payment of interest on the Notes in Shares, as the case may be), is limited to 17,465,809 Shares, which equals 9.99% of the issued and outstanding Shares as of the date hereof (the “Insider Cap”).

In accordance with the terms of the Notes and the Warrants, the Company intends to seek (i) securityholder approval of the issuance of Shares in connection with the Offering (upon conversion of the Notes, exercise of the Warrants and/or payment of interest on the Notes in Shares, as the case may be) above the General Cap, in accordance with Section 607(g)(i) of the TSX Company Manual (the “General Shareholder Approval”), and (ii) disinterested securityholder approval of the issuance of Shares to “insiders” of the Company (as such term is defined in the policies of the TSX), as of the date hereof, pursuant to the Offering (upon conversion of the Notes, exercise of the Warrants and/or the payment of interest on the Notes in Shares, as the case may be) above the Insider Cap, in accordance with Section 607(g)(ii) of the TSX Company Manual (the “Insider Shareholder Approval”).

In addition, approval of the securityholders of the Company will be required in connection with the Conversion Feature, the Call Option and to authorize the Subsequent atai Subscription on the same terms as the Offering (together with the General Shareholder Approval and the Insider Shareholder Approval, the “Shareholder Approvals”).

The Corporation will seek to obtain the Shareholder Approvals at an upcoming special meeting of Shareholders to be held as soon as practicable after the date hereof.

Related Party Transactions

atai is an insider of the Company as a result of its beneficial ownership of, or control or direction over, directly or indirectly, greater than 10% of the outstanding Shares. The participation of atai in the Offering, the Loan Amendment, the Subsequent atai Subscription and the Conversion Feature, both considered independently as well as together as a whole, constitute a “related party transaction” within the meaning of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”) which, absent any available exemption, would require a formal valuation and minority approval under MI 61-101. The board of directors of the Company unanimously determined that the Company may rely on the “financial hardship” exemption from the formal valuation and minority approval requirements set out in Section 5.5(g) and Section 5.7(e) of MI 61-101 with respect to such transactions, given that the Company is in serious financial difficulty, the participation of atai in the Offering, the Loan Amendment, the Subsequent atai Subscription and the Conversion Feature are designed to improve the financial position of the Company, and the exemption provided for in Section 5.5(f) of MI 61-101 is not available, as the transactions contemplated are not subject to court approval under bankruptcy or insolvency law. In addition, the Company has one or more independent directors who have determined that the terms and conditions of the participation of atai in the Offering, the Loan Amendment, the Subsequent atai Subscription and the Conversion Feature are reasonable for the Company in the circumstances and are in its best interests. The Company did not file a material change report in respect of the related party transaction 21 days in advance of closing of the offering because insider participation had not been determined at that time. The shorter period was necessary in order to permit the Company to close the Offering in a timeframe consistent with usual market practice for transactions of this nature.

Early Warning Disclosure

This press release is also being issued pursuant to National Instrument 62-103 – The Early Warning System and Related Take-Over Bid and Insider Reporting Issues (“NI 62-103”) in connection with the acquisition by atai (Wallstraße 16, 10179 Berlin, Germany) of certain convertible securities, convertible into Shares of the Company (the “Acquisition”). The Acquisition occurred on a private placement basis. In connection with the Acquisition, atai purchased 2,220 US Units (consisting of 2,220 US Notes (the “Initial Notes”), the principal of which is convertible into 12,000,000 Shares, and 11,999,100 warrants (the “Initial Warrants”), agreed to purchase an additional 750 Units (consisting of 750 US Notes (the “Subsequent Notes”), the principal of which is convertible into 4,054,054 Shares, and 4,053,750 warrants (the “Subsequent Warrants”), upon the satisfaction of certain conditions, and entered into an agreement, pursuant to which the Company has agreed to enter into the Second Amendment (which will permit atai to convert the outstanding balance under the Loan Agreement into Shares) and grant atai the Call Option to purchase additional convertible notes and warrants (which reduces the Shares purchasable under atai’s current securities purchase agreement with the Company).

Immediately prior to the Acquisition, atai had ownership and control over 37,300,000 Shares and securities convertible into approximately 153,800,000 Shares representing approximately 58.2% of the issued and outstanding Shares, on a partially diluted basis. Assuming the conversion and/or exercise of the principal amount of the Initial Notes (but excluding interest that may accrue), Initial Warrants, the principal amount of the Subsequent Notes (but excluding interest that may accrue), Subsequent Warrants, the outstanding balance of the Loan Agreement and the Call Options (and underlying securities), atai would beneficially own or control in aggregate 269,152,849 Shares representing approximately 66.2% of the issued and outstanding Shares of the Company, on a partially diluted basis.

atai’s acquisitions and dispositions were made for investment purposes. In accordance with applicable securities laws, atai may, from time to time and at any time, acquire additional shares and/or other equity, debt or other securities or instruments (collectively, “Securities”) of the Company in the open market or otherwise, and reserves the right to dispose of any or all of its Securities in the open market or otherwise at any time and from time to time, and to engage in similar transactions with respect to the Securities, the whole depending on market conditions, the business and prospects of the Company and other relevant factors.

An early warning report will be filed under the Company’s profile on the SEDAR+ website at www.sedarplus.ca. To obtain more information or to obtain a copy of the early warning report filed in respect of this press release, please contact atai by email at ir@atai.life.

This press release does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Units in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to qualification or registration under the securities laws of any such jurisdiction. This press release does not constitute an offer of securities for sale in the United States. The Units have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and such Units may not be offered or sold within the United States absent registration under U.S. federal and state securities laws or an applicable exemption from such U.S. registration requirements.

About IntelGenx

IntelGenx is a leading drug delivery company focused on the development and manufacturing of pharmaceutical films. IntelGenx’s superior film technologies, including VersaFilm®, DisinteQ™, VetaFilm® and transdermal VevaDerm™, allow for next generation pharmaceutical products that address unmet medical needs. IntelGenx’s innovative product pipeline offers significant benefits to patients and physicians for many therapeutic conditions. IntelGenx's highly skilled team provides comprehensive pharmaceuticals services to pharmaceutical partners, including R&D, analytical method development, clinical monitoring, IP and regulatory services. IntelGenx's state-of-the-art manufacturing facility offers full service by providing lab-scale to pilot- and commercial-scale production. For more information, visit www.intelgenx.com.

Forward-Looking Information

This document may contain forward-looking information which involve substantial risks and uncertainties. Statements that are not purely historical are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. All statements, other than statements of historical fact, contained in this press release including, but not limited to, statements regarding (i) the closing of additional tranches of the Offering and the receipt of additional proceeds therefrom, (ii) the proposed use of proceeds for the Offering, (iii) Subsequent atai Subscription, (iv) the receipt of the TSX approvals, (v) the entering into the Second Amendment, (vi) the Conversion Feature, (vii) the entering into the Subscription Agreement Amendment, (viii) the Call Option, (ix) the receipt of the Shareholder Approvals, and (x) generally, the “About IntelGenx” paragraph which essentially describe the Corporation’s outlook and objectives, constitute “forward-looking information” or “forward-looking statements” and are based on necessarily based upon a number of estimates and assumptions that, while considered reasonable by the Corporation as the time of such statements, are inherently subject to significant business, economic and competitive uncertainties and contingencies. All forward-looking statements are expressly qualified in their entirety by this cautionary statement. Because these forward-looking statements are subject to a number of risks and uncertainties, IntelGenx’ actual results, objectives and plans could differ materially from those expressed or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed under the heading “Risk Factors” in IntelGenx’ annual report on Form 10-K, filed with the United States Securities and Exchange Commission and available at www.sec.gov, and also filed with Canadian securities regulatory authorities at www.sedarplus.ca. IntelGenx assumes no obligation to update any such forward-looking statements. Moreover, all forward-looking information contained herein is subject to certain assumptions. There can be no assurance that such approvals will be obtained.

For more information, please contact:

Stephen KilmerInvestor Relations(647) 872-4849stephen@kilmerlucas.com

Or

Andre Godin, CPA, CAPresident and CFOIntelGenx Technologies Corp.(514) 331-7440 ext 203andre@intelgenx.com