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spk03: Good day, everyone, and welcome to today's Intelligenix Technologies Corp. First Quarter 2021 Call and Webcast. At this time, all participants are in a listen-only mode. Later, you will have an opportunity to ask questions 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. It is now my pleasure to turn today's program over to Stephen Kilmer, Investor Relations.
spk04: Thank you. Good afternoon, everyone, and thank you for joining us on today's call. With me on the line are Dr. Horst Hubei, IntelligentX's CEO, and André Godin, our President and CFO. 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 of 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. DeBay. Horst?
spk06: Thank you, Steve. Good afternoon, everyone, and thank you for joining us. for the Intergenic's first quarter 2021 conference call. On today's call, I will provide a corporate update and discuss the progress we've made on our key pipeline projects. Following that, Andre will review our Q1 2021 financial results. Then we will open up the line for your questions. I'll start with the Atai partnership. Two days ago, our shareholders approved all proposals at our annual meeting, including the investment resolution related to our 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. This transaction is potentially transformational for Intergenics. It moves the company into a leadership position within the novel therapeutic field of psychedelics, while at the same time providing the needed financial resources to continue to advance our product pipeline. It also means we've gained a very significant new major shareholder. In this partnership, we will integrate our film technology with Attai's existing pipeline and work exclusively with them in the field of compounds for the prevention or treatment of mental health disorders or compounds that have psychedelic, antactogenic, and oneirophrenic properties. Just for explanation, antactogenic drugs are drugs that cause empathy, and oneirophrenic drugs cause an hallucinatory, sort of a dream-like state. Through our first collaboration with Atai, we found that our film technology can address some of the unique complexities of developing psychedelic compounds for the treatment of mental health disorders. For example, the metabolic pathway of some psychedelics requires the concomitant administration of Mio-amino oxidase, that is, inhibitors to achieve the required duration of action of the psychedelic drug. The avoidance of first pass metallization following the firm administration removes the necessity of concomitant dosing of an MAO inhibitor. The firm delivery can thus play an integral role in clearing a clinical pathway for a TIE's existing pipeline, as well as create promising development opportunities for us. The fruits of this are already materializing. A few days ago, we entered into a second feasibility agreement with Attai for the development of novel formulations of salvinorin A. Salvinorin A is a naturally occurring psychedelic compound being developed for the treatment of treatment-resistant depression and other indications. Under the terms of the second feasibility agreement, Intergenics will conduct formulation development work to provide a prototype to Attai for further clinical investigation. The agreement also contemplates a term sheet upon which the parties would, if successful, enter into an exclusive royalty-bearing commercialization license. Moving on to 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 in Germany for the manufacturing of commercial product for Spain and potentially other European markets. Launch preparations are commencing and are on target for product launch in Spain in early Q3. Pedanofil, 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 eight months. As far as PD, partnering discussions are advancing, and our goal is to finalize a partnership arrangement in the second quarter of this year. Now moving on to cannabis films. Several shareholders have inquired about the status of our relationship with Tilray. At this time, we have no indication from Tilray that they plan to resume project activities. With respect to CBD, we have renegotiated the agreement with them to remove the exclusivity, which has enabled us to enter into a deal with Heritage Cannabis for CBD. That said, we intend to reach out to the new Tilray management to explore what could be possible in the future. We obviously believe that we already have a great product to offer and that our ability to develop additional products in the cannabis space using our technology is exceptional. As I mentioned, 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. This initial order was then increased to 75,000 CBD film strips, and we completed that shipment to Heritage at the end of March. That shipment was the first ever from our Montreal facility of commercial quantities of an oral thin film product based on our Versafilm technology. So it clearly marks the achievement of another important milestone for our company. With respect to THC, we announced in February that the USPTO granted a notice of allowance for US patent application 16-110,737, which covers novel disintegrating oral film formulations designed for the transmucosal absorption of drugs. This patent 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. And this significantly reduces having a portion of the THC being swallowed and thereby minimizing the amount of the drug that becomes subjected to unwanted oral first pass metabolization. We continue to respond to expressions of interest in this distinct technology platform from multiple potential industry partners. Now, a few words on Montelukast. The Buena Suri study remains on a temporary recoupment hold as the target study population is considered a higher risk group for severe illness from COVID-19. We're 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 this is appropriate. Animal health. In February, we filed a new provisional patent application at the USPTO that covers the incorporation of high concentrations of active ingredients in products based on our proprietary Betafilm veterinary oral film technology. This higher loading capability enables formulation with a ratio of active to polymer of one to one, thereby pushing the limit of the thin 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 beta film feasibility study announced in early 2020. Like the ATAI partnership moving us into a leadership position within the novel field of intergenics, we believe this VetaFilm patent and the underlying data that supports it will help position intergenics at the forefront of the oral veterinary field. Finally, a comment regarding Suboxone since several shareholders have requested that we provide an update. The main reason for the continued delays of our suboxone program is simply that besides suboxone, we're developing another second product for endo. This other product, which I am not at liberty to disclose, has been given priority by endo. And because of our limited production capacity, we have to put the development of genetic suboxone temporarily on hold. With that, I would now like to turn the call over to Andre for a review of our financial results. Andre?
spk07: Thank you, Urs. Good afternoon, everyone. As Urs mentioned, I'll take a few minutes to discuss the company's financial performance for the first quarter of 2021. We're pleased to see the positive impact of our performance improvement program continue to be reflected in the numbers. Total revenue for the 2021 first quarter amounted to $286,000 compared to $202,000 in the same period last year. The 42% increase in revenue is attributable to an increase in product revenue of $160,000, partially upset by a $76,000 decrease in R&D revenue. Operating costs and expenses were $2.2 million for Q1 2021 versus $2.4 million for the corresponding three-month period of 2020. The decrease is mainly attributable to a $379,000 decrease in R&D expenses, partially upset by a $143,000 increase in manufacturing expenses and an $83,000 increase in For Q1 2021, the company had an operating loss of $1.9 million compared to an operating loss of $2.2 million for the comparable period of 2020. The adjusted EBITDA was negative $1.7 million for Q1 2021 compared to negative $1.9 million for the same period last year. Net comprehensive loss was 2.3 million or 2 cents on a basic and diluted per share basis for Q1 2021 compared to a net comprehensive loss of 2.9 million or 3 cents per share for the comparable period of 2020. As of March 31st, 2021, the company's cash and short-term investment totaled $2 million. And we also fully reimbursed the Bank of Montreal credit facility in Q1 2021. While $2 million is obviously a lower amount of cash that we would like, I would like to remind everyone that this does not include any of the proceeds from Etai's second loan of $500,000 that was advanced a few days ago. nor in its initial purchase of 37.3 million shares of our common stock and 22.3 million warrants for total gross proceeds of approximately $12.3 million. Now that our shareholders have approved our transaction with Atai, while it is still subject to the approval of the TSX Venture Exchange, we currently expect to close or on or about May 14th. As Ors mentioned, this will provide the requisite financial resource to continue to advance our portfolio of innovative film products and products candidates. Also, now that we have received shoulders approval, the company has submitted a listing application to the Toronto Stock Exchange. Any listing of the shares on the Toronto Stock Exchange is subject to Intelligenix meeting all of the listing requirements and obtaining the approval of the Toronto Stock Exchange. There is no assurance that the Toronto Stock Exchange will approve the listing application. If and when approved, we believe our graduation to the CSX will increase our visibility and is a necessary progression as we structure the company for the long term. I will now turn to call back to Dr. Zerbe. Of course.
spk06: Yep, thanks, Andre. In closing, I'd like to once again recognize our team for executing on our long-term strategy. On behalf of my fellow board members, I would also like to thank again our shareholders for approving all proposals at our Annual General Meeting. With that, I will now turn the call over for questions. I'd like to remind you that our forward-looking statements apply to both our prepared remarks and the following Q&A. Thank you.
spk03: At this time, if you would like to ask a question, please press the star and 1 on your touchtone phone. You may remove yourself from the queue at any time by pressing the pound key. Again, that is star and one if you would like to ask a question. And we will take our first question from Pevan Rao. Please go ahead. Your line is open.
spk10: Good afternoon to the IntelliGenX team. Congratulations on that. Hi. And also for the progress. My question is in relation to dollar film. and also Resupport, when are we likely to see some revenue flowing through? Now, we've obviously went past just a formulation from being a formulation company to a potential manufacturer. When do we see us actually generating revenue? Would you be able to give some timelines, please? Thank you.
spk06: Okay. Let me start out with Resupport because that's easier. The launch in Spain is scheduled for early July, if I'm not entirely mistaken. So that would generate first revenues from product sales for us. As far as ResaPort US, the best guess that I can provide right now is We have just started manufacturing the full-scale production batches that we need in order to respond to the CRL that we received from the FDA. We expect to submit the response to the CRL early next year and so with a six-month response. We expect that sometime in the second half of next year, probably towards the end of next year, we expect revenues from sales in the U.S.
spk05: To Dallasville,
spk06: We need to, we, in this case, meaning, um, intergenics and our development partner, a quest if we need to respond or conduct the safety study that FDA requested in the and we made the commitment to not commence the study before we have signed up a partner. We are in very advanced. discussions with a partner obviously I cannot disclose any names we expect the study to commence in in the second half of this year and then the response will be filed most likely early next year. So towards the, in the second half of next year, 2023, for sure, we are expecting revenues from Tadalafil.
spk10: One last question, if I may. Yep. With Atai being, or should I say, gaining majority shareholder, do you anticipate a board nomination from Atai?
spk06: Yes, the deal provides that they will have delegates on our board proportional to their holdings. So they plan in the first branch to hold 25% or accordingly. The agreement provides that they will get a quarter and that concretely means two directors and add it to our board.
spk10: Thank you, and good luck.
spk06: Thank you. Thank you.
spk03: And we will take our next question from Eric Herbst. Go ahead. Your line is open.
spk02: Hi. Congratulations on the results and all the progress. I had a few questions. The first, I was expecting to see a second tranche of the TETRA 40% payment in the first quarter. Did something happen with that?
spk06: Andre, can you respond, please?
spk07: Yeah. It was, I mean, there's a difference between revenue recognition and, you know, when we receive a payment, and that's, you know, according to US GAAP, but we already received the second payment, so it has been fully paid. There remains 10% or 100,000 to be collected from Tetra upon approval of the product.
spk02: And when do you plan on recognizing the next 40%? It's been recognized. Okay. They mentioned in the AGM that there are two new cannabis films under development. Are you able to say who those are for or if those are for heritage?
spk06: No, that's... We can only talk generically about that. We cannot provide any details.
spk02: Okay. Thank you. And then in the AGM, they also mentioned that a second order for heritage was potentially expected to be received and shipped in the second quarter. Could you provide any color on that?
spk06: I can only confirm that. And qualitatively speaking, yes. i expect that order to be significantly larger than the first order but again i don't want to provide any numbers we are in regular conversations with heritage so from from those conversations in which i regularly participate we expand we expect the order to be coming in very soon but again i i can only comment qualitatively to the question. But we're confident it's going to come in the very near future.
spk02: Thank you very much. If AdSide does end up exercising all of their warrants and buying all the shares and they get their full 60% ownership, will there be any conditions around buying out the remaining 40% of shares, like a supermajority being required? Or have you discussed that?
spk06: That has never been discussed with them. André, you may add if you want, but I can confidently say this has never been subject of any discussions between ourselves and our time management. Yeah, I can confirm that.
spk07: I mean, so far, you know, they're going to own 25% after the first closing. They have, you know, options to go up to 60, but never was it discussed that, you know, what would happen after that, whether they would want to own the entire company, whether they would make an offer to shareholders. We haven't discussed that.
spk02: Okay, and one final question. If we are approved for the TSX uplisting, is there anything in that process of actually uplisting that would lead to an accounting of shares that would eliminate potentially any naked short positions that there could potentially be?
spk06: Yeah, Andre, I think that's for you, right?
spk07: I mean, obviously, the TSX is highly regulated, so it could potentially reduce the short. You can never eliminate short in Canada, but I think that the main issue right now is that most of the short is coming from the U.S. So in Canada, honestly, it's not so bad. So I think that it's always been, you know, an objective of Intelligenix to migrate to a senior exchange in the U.S., to take care of that problem or at least, you know, control it. So that's something that we'll definitely keep in mind in the future. Hopefully with the stock price appreciating, it could potentially allow us to migrate to a senior exchange in the U.S. So being in a senior exchange in both Canada and U.S. would definitely reduce the short drastically.
spk02: Excellent. Thank you so much, and congratulations again.
spk07: Thank you.
spk03: And we will take our next question from David DeAngelis. Your line is open.
spk08: Hi, everyone. It's a pleasure to be speaking with you, and again, congratulations on the Atai agreement, and I can probably speak for most investors. It's a lot of big confidence booster for all of us. My first question is something that actually hasn't been talked about, but came across a few of my colleagues' attention. Last June, Dr. Obeid at the company there had written an article in Contract Pharma magazine in regard to putting vaccines onto oral films. I know the company hasn't talked about this at all, but I was just curious if that would be an area that might be explored either in the past or in the future. I know you have a ton of things on the burners now, but if you could speak to that at all, it's something, again, we'd be interested in hearing about.
spk06: Yeah. I mean, it's, of course, a very attractive segment. And we, in fact, have looked in the past. We not only have looked into this possibility, we concretely spoke and attempted to enter into a partnership with one leading vaccine developer here in Montreal. We had to prioritize because we have limited resources. And so that program was put a little bit on the back burner, but Rudolf had every right to mention that this program has not been forgotten, particularly with the COVID situation right now. We are again looking into this, but again, there is no concrete program in progress right now.
spk08: Okay, thank you so much. And it relates also to the second part of my question with how I may be involved with some other projects that have been ongoing but may be placed on hold in the company due to either not enough funds floating around or just so many things competing for attention. For example, the Montelukast could tie perhaps say, hey, this is, even though it's not our focus, this might be something we're very interested in speeding the process to market, and we have some resources that may lend to moving that program forward once it's approved, you know, to be reexamined by Health Canada. How does that relationship work exactly in relation to all and any projects that are ongoing?
spk06: Yeah, to respond specifically to your Montelukas comments, Montelukas has not been put on hold because of lack of funding. The one and only reason as to why we had to put this on hold was the COVID situation. We simply had to stop recruitment because of the high COVID-19 risk of the target patient population. Now, with respect to Atai, Atai has expressed, let me put it this way, a potential interest in the acid. So they have reserved the right at some point down the line if it turns out that this could be attractive for them to step in and take over the program. Taking over in this case, meaning that we, of course, would continue developing the program, but with and for a tie as our commercialization partner.
spk08: Thank you so much. One final question. In regard to SIBEN, I believe Intelligenix is currently creating, helping them create some submission batches for their ongoing phase two studies. Is the company receiving revenue for that currently or in the future? What's the relationship in terms of economics?
spk06: The agreement with Cybin is a feasibility study agreement. So we are developing a prototype formulation that Cybin intends to further test in clinical studies. I cannot confirm that these clinical studies would be Phase II studies. That is confidential, but I doubt it would be because very typically, you know, in the development process before you even get approval from regulatory authorities for a phase two, you would first have to conduct a phase one. But that is Cybin's decision. So, again, we have a feasibility agreement with them in place under which we do formulation development, prototype development for further clinical development by Cybin at their discretion and under their regime.
spk08: Okay, great. Again, thank you. Congratulations to all, and good talking to you. Good luck with everything ongoing this year. Very exciting. Thank you. Thank you. Thank you.
spk03: And we will take our next question from David Yuen. Your line is open.
spk11: Thank you so much for allowing me to ask a question here, Dr. Zurb and Andre. And congratulations on the progress. You know, with a Thai partnership, and the potential for a tie to purchase up to 60% of the company. And you and Andre have confirmed that there have been no talks on their end to acquire the rest of the outstanding shares. Would you ever entertain that idea if it ever gets to a point? Because there's a lot of programs in place, and I think it looks very attractive to a company like a tie.
spk06: Honestly, We're not looking that far out into the future. We'll discuss if and when we will be confronted with that problem. This has never been subject of discussion within management or at the board level. I can honestly say that. So it has not been a concern. And a tie, as Andre mentioned before, Atai has never addressed this subject either in our regular conversations.
spk11: Thank you for that. And also a second question in regards to Montelukast. So Atai, they have expressed interest and I just want to confirm what you said. If they were to follow through, they would be the exclusive commercialization partner, correct?
spk06: I mean, a deal hasn't been cut yet, but that is what we normally do. I think with one exception only, and that is cannabis only enter into exclusive commercialization deals. So I would anticipate, even though, like I said, no deal has been made yet and not even discussed, that this would be an exclusive deal. Thank you very much for your time. You're welcome. Thank you.
spk03: And we will take our next question from Tom Maglino. Your line is open.
spk09: Thank you very much for taking my questions. And as a longtime shareholder, congratulations to you and your team. Things are certainly looking much more positively. My first question is regarding the penetration, market penetration of RISAPORT into other European countries. I understand that each country requires its own form of approval. Can you give us a roadmap to that and do you know if our partner has started applying to other European countries? And my second question regards the companion animal program. Can you give us, I'm not familiar with the regulatory path in non-human drugs. Can you give us some overview on that and when you might expect this program to actually reach fruition?
spk06: Certainly. with respect to your first question regarding RISA and potential launch in other jurisdictions in Europe. So it's not quite correct what you said that or what you're assuming that the application requires full approval in each jurisdiction. There is a European application. We filed a European application. And so After European approval has been achieved then the product simply has to enter a national phase which mostly deals with pricing now So the regulatory pathway into other European jurisdictions has been greatly Simplified now As far as concrete plans to actively enter into other European countries, I'm not aware of any concrete steps. What I can qualitatively say is that Exceltis approached us for that. Again, this is a qualitative statement. They stated that this is a high-potential product for them in Europe, and they would like to be the first with a migrant film in as many European countries as possible. At this point in time, they are focusing on the Spanish launch. I'm not aware of any concrete plans for them to submit regionally in any other countries. European country at this point in time. I suspect that will be the case once they have a first impression regarding the performance of the product on the Spanish market.
spk09: Thank you very much for clarifying that. That's very helpful. So then would the production facility be subject to re-inspection or would the Spanish inspection do for other countries?
spk06: No, there's no inspection anymore. That's all behind us. We are, as I'm sure you're aware, with qualified European manufacturer and all these regulatory steps are behind us. They are currently, as we speak, literally in the process of making the necessary qualification batches, which are already saleable product. So they are really in an advanced stage of bringing the product to the market.
spk09: That is very good news. Thank you very much for that information.
spk06: You're welcome. And then with respect to animal health, that was your second question. Principally speaking, the regulatory requirements procedure for approving an animal health product is more or less identical with the procedure that applies to human medical products. So there's not much of a difference. And also with respect to timing, there is practically speaking no difference. We have to perform the same safety studies, phase one, phase two studies. It's pretty much the same as with human products.
spk09: So you would be looking at a runway of probably several years before this product would come to fruition. Is that correct?
spk06: That is to be expected, yeah.
spk09: Thank you very much, and again, all the best to you and your staff, and congratulations.
spk06: Thank you. Thank you.
spk03: And once again, to ask a question, that is star and 1 on your touchtone phone. Again, star and one to ask a question. And we will take our next question from . Go ahead, your line is open.
spk01: Hello, Dr. Zerbe and André. Congratulations on the recent progress. I have a couple of questions. First, what do you expect the timeline to be on the application for the Toronto Stock Exchange?
spk06: André, do you want to respond?
spk07: Yes, I will. I mean, we started the process already, or I would say probably a couple of weeks now. They need to I mean, there's been a lot of information exchange, and they need to submit our application in front of their committee, and that should happen this month. So, and after the committee, if the committee accepts the listing application, then we could start trading on the TSX maybe probably five to seven days after that. If everything goes according to plan, we are expecting to be trading on the TSX this month.
spk01: Okay, thank you. One more question. Am I accurate in the fact that we would be paying Tilray royalties on the revenues from Heritage?
spk06: Yes, that is correct. They get a small single-digit percentage.
spk01: And what was the thinking in entering into an exclusivity agreement with them without any guarantees that they ever actually bring a product to fruition through us?
spk06: Well, that's a good question. When we entered into negotiations for an agreement with them, there was a lot of excitement and hype around that they were trading sky high, and they had very strongly suggested that they are very anxious to move the film park forward. And then as time progressed, for reasons that have never been very clear to us, the interest began to decline. But again, we never were provided any concrete insight into their decision making with respect to this. And so we then tried to deal with that situation. I think we did that, you know, quite successfully by negotiating with them to get rid of the exclusivity so as to be able to get our CBD film to the market, which we had developed by then. And so that's really all I can say. We don't really have that much insight into their decision-making process and even less so when they were tied up with their merger discussions with AFRIA. At that point, there was complete silence.
spk01: Okay. Thank you. And again, I look forward to what's to come. Thank you. Thank you.
spk03: And it appears we have no further questions at this time. I will now turn the call back to Dr. Zerbe for any closing or final remarks.
spk06: Yeah, thank you very much. And I would again like to thank our shareholders for the continued support that we have been enjoying. And as always, I want to thank our staff, our employees for their continued hard work. So again, thanks to everybody. And that concludes the call. Thanks and bye-bye.
spk03: This does conclude today's program. Thank you for your participation. You may disconnect at any time.
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