This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk00: Good afternoon everyone and welcome to today's Intelligenix Technologies Core fourth quarter and full year 2020 call and webcast. At this time all participants are in a listen only mode. Later you will have an opportunity to ask a question during the question and answer session. You may register to ask a question at any time by pressing the star and 1 on your touchtone phone. I will be standing by should you need assistance. It is now my pleasure to turn today's program over to Stephen Kilmer, Investor Relations. Please go ahead.
spk04: Thank you. Good afternoon, everyone, and thank you for joining us on today's call. With me on the line are Dr. Horst Urbe, IntelligentX's CEO, Andre Godin, our President and CFO, Dana Mattson, our VP, Business and Corporate Development, and Tommy Kenney, Vice President, Intellectual Property and Legal Affairs, General Counsel of IntelligentX Corp. Before we begin, I would like to remind you that all amounts mentioned today are in U.S. dollars unless otherwise mentioned, and today's call may contain forward-looking information that represents our expectations as of today and accordingly are subject to change. We do not undertake any obligation to update any forward-looking statements except as may be required by U.S. and Canadian securities laws. A number of assumptions were made by us in preparing these forward-looking statements, which are subject to risks and results may differ materially. Details on these risks and assumptions can be found in our filings with the U.S. and Canadian Securities Commissions. I would now like to turn the call over to Dr. Zerbeyan. Horst?
spk03: Thank you, Steve. Good afternoon, everyone, and thank you for joining us for the Intergenics fourth quarter and full year 2020 conference call. This time, we're going to break with tradition a little. First, André will review our Q4 and full year 2020 financial results, then I'm going to review the partnership with Attai that we announced earlier this month, as well as provide an update on our key pipeline projects. Following that, we will open up the line for your questions. With that, I will now turn the call over to Andre. Andre?
spk02: Thank you, Ward. Good afternoon, everyone. As Urs mentioned, I'll take a few minutes to discuss the company's financial performance for the fourth quarter as well as the full fiscal year ended December 31, 2020. As we mentioned in today's press release, the positive impact of our performance improvement program continues to be reflected in the numbers. For the fourth quarter, the total revenue for 2020 fourth quarter amounted to 790,000 compared to 68,000 in the same period last year. A greater than 11-fold increase in revenue is attributable to an increase in revenues from licensing agreements of 671,000 and an increase in R&D revenue of 51,000. Operating costs and expenses were $1.8 million for Q4 2020 versus $2.4 million for the corresponding three-month period of 2019. The decrease is mainly attributable to a $563,000 decrease in R&D expenses and a decrease of 127,000 FTNA compared to the same period last year. For Q4 2020, the company had an operating loss of $1 million compared to an operating loss of $2.7 million for the comparable period of 2019. That's an improvement of $1.7 million in this quarter alone. Adjusted EBITDA was negative $754,000 for Q4 2020, compared to negative $2.1 million for the same period last year, an improvement of $1.3 million. Net Comprehensive Loss was $1.3 million or $0.01 on a basic and delusional per share basis for Q4 2020 compared to Net Comprehensive Loss of $2.7 million or $0.03 per share for the comparable period of 2019. Now for the full year, the total revenue for a 12-month period December 31st, 2020 amounted to $1.5 million representing an increase of 108 percent over $742,000 for the year ended December 31, 2019. Operating costs and expenses were $7.8 million for the full year 2020 versus $10.3 million for the corresponding 12-month period of 2019, a significant reduction of $2.5 million in operating expense from last year. For the full year 2020, the company had an operating loss of $973,000 compared to an operating loss of $2.4 million for the comparable period of 2019. Net comprehensive loss was $7.1 million or $0.07 per basic and deluded shares for the 12-month period of 2020. compared to a net comprehensive loss of $10.3 million, or $0.11 per basic and deluded shares for the comparable period of 2019. That's an improvement of more than $3 million. As of December 31, 2020, the company's cash and short-term investment totaled $2.2 million, which did not include the $2 million secure loan granted to Intelligenix Corp. by a tie in March 2021. The Investments Quebec credit facility was reimbursed before year-end, and the Bank of Montreal credit facility was also fully reimbursed in Q1 2021. I will now turn the call back to Dr. Zerbe.
spk03: Thanks, André. First, on the Atai partnership, last week we announced our strategic partnership with Atai Life Sciences, a tech-driven biopharmaceutical company with an attractive portfolio of psychedelic and non-psychedelic compounds intended for the treatment of mental health disorders. In the course of our dealings with Atai in 2020, we realized that psychedelics have the potential to become a hugely attractive alternative for the treatment of mental health diseases, And we became aware that our collaboration, which initially was simply a feasibility agreement, offered the company the opportunity to become a significant player in the market with significant growth potential. That motivated us to approach Hatai in late 2020 with the proposal for negotiating a strategic partnership. Through this partnership, we will integrate our film technology with Attai's existing pipeline and work exclusively with them in the field of compounds, skin or treatment of mental health disorders, or compounds that have psychedelic, intactogenic, and or neurophrenic properties. For those who are not so familiar with these, intactogenic compounds are... create empathy and onerophrenic compounds have hallucinogenic properties. Now, through our prior collaboration with Atai during that feasibility study, we found that our film technology can address some of the unique complexities of developing psychedelic compounds for the treatment of mental health disorders. and can play an integral role in clearing a clinical pathway for a TIDES existing pipeline, as well as create promising development opportunities for us. One of the critical features of our technology is the elimination or reduction of first-pass metabolism, which can reduce serum concentrations and allow for the delivery of non-oil bioavailable compounds. Our innovative delivery system has the potential to improve the efficacy, safety, and tolerability of Attai's development candidates. We believe the combination of our technologies is a critical step towards bringing these disruptive treatments to the market and positions us solidly in the novel psychedelic therapeutic space. Concerning Attai's expertise and expected market leverage, we are thrilled to exclusively align with them on the long-term development of mental illness treatments. As part of the strategic partnership, Attai will initially acquire approximately 25% off Intergenix and has already granted us a secured loan in the amount of $2 million, of which $620,000 were used to fully repay our outstanding credit facilities with the Bank of Montreal. Atai has agreed to purchase 37.3 million shares of our common stock and 22.38 million in warrants for total gross proceeds of approximately $12.3 million U.S. dollars. a TIE will have the right to subscribe for up to 130 million additional units with each unit made up of one share of common stock and one half of a warrant. Assuming a TIE exercises all warrants and additional units, a TIE could ultimately hold up to approximately 60% of the issued and outstanding shares. Following the transaction approval from shareholders and the TSX Venture Exchange, we then plan to use our best efforts to list on the Toronto Stock Exchange, the TSX. Relating to the TSX will increase our visibility and is a necessary progression as we structure our company for the long term. This partnership will truly be transformational. It will position us as a leading developer and manufacturer in the psychedelic therapeutic space, while also providing us with substantial to continue progressing our innovative pharmaceutical film product candidates towards commercialization. And speaking about our pipeline of other product candidates, here are some brief updates. first on Resupport. In August, we expanded our Resupport commercialization agreement with Exceltis to include the European Union, which added 26 countries to our commercialization partnership. We have since entered into a contract manufacturing agreement with LTS, Norman Therapy Systems, in Germany for the manufacturing of commercial product for Spain and potentially other European markets. Launch preparations are commencing and on target for a product launch in Spain in June. On Tadalafil, the revised protocol for the irritation study that FDA requested in the CRL was submitted to the agency and recently approved. Duration of the study will be approximately eight months. On the BG side, partnering discussions are advancing and our goal is to finalize a partnership in Q2 of 2021. Now, moving on to cannabis films. In January, we entered into a definitive supply agreement with Heritage Cannabis for the manufacturing and supply of 10 milligram CBD film strips. Stemming from that agreement, we received our first purchase order from Heritage for 50,000 CBD film strips. We were pleased that this initial order was recently increased to 75,000 CBD film streps, and we expect to make the first shipment of product to Heritage at the end of this quarter. On the THC front, we were pleased to announce in February that the USPTO granted a Notice of Allowance for US Patent Application 16110,737 which covers novel disintegrating oral film formulations designed for the transgrucosal absorption of drug and is intended to protect Intergenic's Disintec products. Disintec has been specifically designed by Intergenic to optimize mucosal absorption of drug by utilizing controlled erosion as a mechanism to release THC into the oral cavity. thus avoiding having a portion of the drug being swallowed and thereby minimizing the amount of THC that becomes subjected to unwanted oral first-pass metabolization. The disintake allowance comes at an opportune time as we respond to the multiple expressions of interest that we have already received in this distinct technology platform from potential industry partners, and further positions intergenics as a leading partner in the cannabis or film field. Montelukast, the Buena study involved as the target study population is considered to be a higher risk group for severe illness from COVID-19. We are closely monitoring the situation and will resume enrollment under our amended protocol as soon as practicable. In the meantime, we'll continue to evaluate the trial's expansion to the United States via a potential IND filing with the FDA when it is appropriate. Animal health. In February, Intergenics filed a new provisional patent application at the USPTO that covers the incorporation of high concentrations of active ingredients in products based on our beta film proprietary veterinary oral film technology. This higher loading capability enables a formulation with a ratio of active to polymer of one to one, thereby pushing the limit of the film capabilities and distinguishing it from known oral film technology. Accordingly, this new patent will allow us to incorporate high amounts of drug into our film while still keeping it small enough to administer easily to companion animals. In addition, we were pleased to receive from our development partner, an undisclosed leading animal health company, very encouraging blood level results from the Betafilm feasibility study announced in early 2020. Like the Atai partnership, catapulting us into a leadership position within the novel field of psychedelics, we believe this VetaFilm patent and the underlying data that supports it will help position Inteligenics at the forefront of the oral veterinary film field. In closing, I'd like to once again recognize our team for executing on our long-term strategy, and I would also like to take the opportunity to encourage our shareholders to vote for on all proposals related to the Atai transaction at our upcoming annual meeting on May 11. With that, I will now turn the question, I'm sorry, I will now turn the call over for questions. I would like to remind you that our forward-looking statements apply to both our prepared remarks and the following Q&A. Thank you.
spk00: At this time, if you would like to ask a question, please press star and one on your touch-tone phone. Again, if you would like to ask a question, please press star and one on your touch-tone phone. We will pause for a moment to allow questions. Again, that is star and one to ask a question. We will take our first question from Fadi Zanadin, who is a private investor. Please go ahead.
spk01: Hi. Good afternoon, everyone. My first question, Horst, is in regards to the RZA port Spain, the projected launch was supposed to be in Q1, and now I believe you said it's in June. Could you please shed some light on this?
spk03: Yeah, that has to do with the validation. The regulatory requirement in the target country in Spain is such that three validation batches have to be completed in order to perform the launch. And there is, and these are, you know, relatively simple technical reasons that in the meantime, have been overcome and the validation is progressing.
spk01: Okay. So would it be safe to say that June is going to be a definite month for the launch of Prince of Port Spain?
spk03: Unless something really unexpected, and I wouldn't know at this time what could happen, would happen, my answer would be yes.
spk01: Okay. Okay. And my next question is in regards to the CBD Versafilm with the Heritage. So just to make sure I heard you correctly, you said that you will be delivering the first batch to Heritage by end of this quarter, which literally ends next week?
spk03: Yes, that is correct. That's the target. The batch has been manufactured. It has been packaged. It sits in our warehouse. We're waiting. for the final analytical release, and the very last results are coming from an external lab that's microtesting that's supposed to come by the end of this week or at the latest early next week. So we are, at this point, still on target to deliver, to ship, I should say, in Q1. And so... My answer is yes. We're on target for that.
spk01: Okay. And I just have two more questions. The third question is in regards to the Suboxone Versafilm with PAR. Any update on that and a potential near-term launch?
spk03: That product has moved back a little, mostly for capacity reasons. We have to perform, under FDA requirements, a so-called site change. The site change involves the manufacturing of three full-scale batches, plus we might, but that's not sure yet, we might have to repeat the bio study. And the Manufacturing of these three full-scale batches is going to take time and effort. We are debating to later this year, but that is still open. We have competing projects that compete for production space.
spk01: Okay. And my last question for you is in regards to the you had mentioned that the irritation study received positive feedback from the FDA and that you were in significant discussions with a partner and that the partnership should be announced in Q2. Could you shed more light on that and what are going to be your main monetary or sorry, your main income drivers going forward in the next quarter.
spk03: You mean for this particular product or more?
spk01: No, I'm sorry. I kind of split it into two. I want to, if you can shed some more light on the Tadalafil and the partnership. And the next question was for Andre in regards to income for the company. When you guys see yourself going into the cash flow positive territory and with which products do you see that happening first?
spk03: Yeah, so let me respond to your question pertaining to Tadalafil. And unfortunately, I can't provide any details. These are ongoing discussions. Dana is conducting those. Mainly, she is on the call as well. What I can say is that we are talking to two companies, one in Canada, the other one in the U.S., but I cannot provide at this point information any specifics. Sorry about that.
spk02: No problem. Yeah, so it's Andre here. We obviously were expecting to launch our CBD film next week. And our resupport in Spain in June. There will be or should be also some R&D revenue and also, you know, based on the discussion we will have with our potential partner with the Tadalafil product, that could also generate revenue. But in order to be in a situation where we would be able to cover our burn rates or be cash flow positive, it's probably not going to come until But with the obviously with the investment of a tie that will allow us to get to that point, you know, without needing any further investment, even though a tie might invest more than $12.3 million. But we are expecting that with that $12.3 million, we should be able to get to a point where we're profitable at least cash deposit.
spk01: Okay. Thank you so much, guys. And I wish you guys the best of luck. And I think the company has made a tremendous achievement, you know, since the pandemic. And I congratulate all of you on all the hard work. Thank you so much.
spk03: Thank you.
spk01: Thank you.
spk00: Once again, if you would like to ask a question, please press star and 1 on your touch tone phone. Pause one more moment to allow questions to queue. And we have another question from, never mind. I apologize. We have no further questions at this time. I will now turn it back over to Dr. Zerbe for closing remarks.
spk03: Yeah, so thank you very much. In closing, I just would like to thank all our investors for their ongoing support. And that really comes from that. I would really ask every single investor to take advantage of your voting rights and vote in favor of the Atai investment. I think that it has become very obvious through the various publications that this is a huge step forward for this company. So all investors, please contribute to making this happen. Thank you very much again.
spk00: This does conclude our presentation. Thank you for your participation. You may disconnect at any time.
Disclaimer