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Intelgenx to achieve profitability earlier than expected

Analyst Swayampakula Ramakanth, in a research note released to clients on Thursday, observed a higher than expected increase in the number of Forfivo XL prescriptions over 2014, which will allow Intelgenx to achieve profitability earlier than expected. 

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H.C. Wainwright & Co. (HCW) has reiterated its ‘buy’ recommendation for IntelGenx Technologies (OTCQX:IGXT), encouraged that recent growth has brought profitability closer for the company.

Analyst Swayampakula Ramakanth, in a research note released to clients on Thursday, observed a higher than expected increase in the number of Forfivo XL prescriptions over 2014, which will allow Intelgenx to achieve profitability earlier than expected. HCW kept its 12-month price target of $2.00 per share.

Thanks to royalty payments from its commercialization partner Edgemont Pharmaceuticals and other milestone payments for achieving Forfivo sales targets, Intelgenx should break even by the second quarter of 2015, said HCW, after an 88 percent increase in the number of Forfivo XL prescriptions over the last year. 

"The trend has continued into 2015, with a total of 10,600 prescriptions written during the first three months. As a result, Intelgenx received $463,000 in royalty revenues from Edgemont Pharmaceuticals…an increase of 171% year over year," wrote the HCW analyst.

"In December 2014, Edgemont also agreed to extend the marketing exclusivity for a $1.2 million milestone payment. In addition, Intelgenx is on track to receive a multi-million dollar milestone payment on achieving a pre-determined Forfivo XL sales target in 2015."

Ramakanth predicts the company could achieve a net income of approximately $1.4 million for the full year.

Evaluating Intelgenx’s growth potential, the analyst also observed that Intelgenx has been working on ten different candidates, many of which are near-term catalysts, which should push revenues higher in the long term.

These include Rizaport (for migraines), which could receive EU regulatory approval as early as the second half of this year and FDA approval in 2016, and INT0007 (for erectile dysfunction), which has successfully completed bioequivalence studies.

Management could file a New Drug Application (NDA) for INT0007 with the FDA in 2016.

As a result of the new projects, which also include three projects partnered with Par Pharmaceuticals, the analyst expects revenues to grow from nearly $4.8 million in 2015 to $38.5 million in 2025. A new manufacturing facility costing US$4.8 million will help the company attain its targets.

Ramakanth also noted that Intelgenx exceeded HCW's revenue estimates. On March 31, the company reported revenues of $1.7 million, which was $200,000 above H.C. Wainwright’s estimate of $1.5 million. Net loss for the quarter was $2.2 million, compared to an estimate of $2.4 million.

Quick facts: INTELGENX TECHNOLOGIES CORP.

Price: 0.69 CAD

TSX-V:IGX
Market: TSX-V
Market Cap: $64.53 m
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