IntelGenx Technologies Corp.

Edward Miller - Director, Investor Relations Dr. Horst Zerbe - President and Chief Executive Officer Andre Godin - Executive Vice President and Chief Financial Officer

Swayampakula Ramakanth - H.C. Wainwright Patrick Tully - Endeavor Asset Greg Eisen - Singular Research

Good afternoon and thank you for joining us today for the IntelGenx third quarter 2016 management call. With me on the call today are Dr.

Horst Zerbe, President and CEO; and Mr. Andre Godin, Executive Vice President and CFO.

Before we begin, I’d like to remind you that all amounts are in U.S. dollars and today’s remarks contain forward-looking information that represent 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. Securities and Canadian laws.

A number of assumptions were made by us in preparing these forward-looking statements, which are subject to risks, results may differ materially. Details on these risks and assumptions can be found in our filings within the Canadian and Securities and Exchange Commission, SEC.

I would now like to turn the call over to Dr. Zerbe.

Thank you, Eddie. Good afternoon and welcome to our third quarter results conference call.

I will initially provide a brief corporate update and then discuss any progress we made on our key pipeline projects and then finally Andre will review our Q3 financial results. In October, we hosted a boot at the CPhI exhibition in Barcelona, Spain.

CPhI is the world’s largest exhibition for pharmaceutical service providers. We had over 50 meetings with pharmaceutical companies and our business development group is currently following up with these companies.

At that event, we also met with our, with the executive management of the Chemo Group and as you may recall, we recently signed a definitive agreement with the Chemo Group for three generic products. Chemo is active in over 40 countries and hence this is an opportunity for us to expand our global reach with our pipeline.

Regarding our facility, we have now completed the construction on the manufacturing and laboratory facilities and we’re currently preparing an application for an establishment license and that application will be submitted to Health Canada later this month. In the meanwhile equipment qualification is ongoing and that includes utilities and manufacturing equipment, target completion date for these activities is December 2016.

In the meanwhile, the manufacturing of submission batches for Rizaport and for Tadalafil is ongoing. Few words on our key pipeline projects, first Rizaport in co-operation with our co-development partner RedHill, we recently signed a term sheet with the Korean company, Pharmatronic for the commercialization of Rizaport in South Korea.

It is our objective to close this deal before yearend. We are working with Grupo Juste towards the commercial launch of the product in Spain.

This involves a two-step process, in early September, we submitted the application for the so-called national phase with the Spanish authorities and once that if application has been approved, that will be followed by the submission of a so-called aeration that is the European terminology for site change. That application will or the approval of that application will take approximately three months and so we are expecting an approval of the product in the second half of 2018.

In the meanwhile, we are progressing the U.S. application and we’re expecting approval of the U.S.

application in the second half of 2017. Grupo Juste has the right of first refusal for 10 additional countries mostly Latin American countries including for example Belize, Caribbean, Chile, Colombia, Costa Rica, Mexico and a few more.

As I mentioned before, we are planning to resubmit the 505(b)(2) NDA with FDA in first quarter of 2017, the manufacturing of the submission batches is ongoing. This will be followed by a level two review, and so which usually takes six months and hence in the second half of 2017, we are expecting the product to be approved.

We are in active discussions with additional potential partners for commercialization rights in Europe and in the United States. Regarding Montelukast, we recently completed a Phase 1 clinical study.

The study objectives of that study were to demonstrate that Montelukast when administered via an oral film will provide therapeutically effective blood levels and secondly that Montelukast when delivered using a film will cross the blood brain barrier. The results show that we very significantly improve the pharmacokinetic profile, we were able to increase the bioavailability by 52% against the reference product and we were also able to demonstrate that the drug crosses the blood brain barrier.

Based on these results, we decided to plan a Phase 2 which is a proof of concept study, the study is currently in preparation. The study will be conducted in approximately 25 Alzheimer patients, patient enrollment is expected to commence in the first quarter of 2017 and the results will be available in the fourth quarter of 2017.

Depending on the study results, we then might actively seek a partnership for this program. Turning now to the Part project for opioid dependency, the product is mainly driven by litigation and the status of the currently ongoing program for litigation with Monosol and Indivior is as follows; we prevailed on the non-infringement of two patents, two Orange Book patents and in the claim construction ruling, were found to be infringing on a third patent that’s also listed in the Orange Book patent.

Since subsequent to this ruling there was a let me say contradictory ruling issued by the same Dutch. We decided to file a motion to reopen.

That motion is currently pending and currently and also we filed an appeal. That appeal is currently pending.

In addition to the Orange Book patents, we were also sued for infringement on two process patents which are not listed in the Orange Book. The claim construction hearing clearly revealed that we are not infringing on the relevant claims of these two patents and what I can also report is that the court date for these proceedings on these two process patents has been set for November 16, 21, 22, and 23, two IntelGenx representatives will be present for that court hearings.

Finally, on Tadalafil, the manufacturing of sedition batches is ongoing. The submission or resubmission of the 505(b)(2) NDA is scheduled for the second quarter of 2017 and the U.S.

launch of the product is scheduled for the second quarter of 2018. Again that product is mostly IP driven at this point, the substance patent as I reported before will expire in November 2017.

There are besides the substance patent three more Orange Book patents protecting the product. Now two of those products were recently invalidated through a so-called IPR and IntelGenx has earlier this year submitted an IPR with the objective of invalidating at third and last Orange Book patent.

I can only report qualitatively at this point that we are extremely confident that the IPR will be successful meaning that we will be able to invalidate that patent and hence, we continue to anticipate that we will launch the product in the second quarter of 2018. So having said this, I would now like to turn the call over to Andre who will review our Q3 financial results.

Thank you, Dr. Zerbe.

Good afternoon, everyone, I will now talk about the company’s performance for Q3 2016. The total revenues for the three month period ended September 30, 2016 amounted to $1.8 million which represents an increase of 167% over the second quarter of 2016.

When compared to the third quarter of 2015, it represents a decrease of 564,000 or 24%. A decrease for the three-month period ended September 30, 2016 compared to last year’s corresponding period is mainly attributable to decrease in royalty of 248,000 as well as a decrease in milestone revenue of $1.7 million and in deferred license revenue of $409,000.

This is offset by an increase in the upfront and deferred revenue on the monetization Forfivo of $1.8 million. Operating cost and expenses were $1.7 million for the three-month period ended September 30, 2016 compared to $1 million for the corresponding period of 2015.

The increase the three-month period ended September 30, 2016 is mainly attributable to an increase in R&D expenses of $114,000 and SG&A of $519,000. For the third quarter of 2016, the company generated operating income of $88,000 compared to operating income income of $1.4 million for the comparable period of 2015.

Net comprehensive income was 62,000 or $0.001 on a basic and diluted per-share basis for the third quarter of 2016 compared to net comprehensive income of $1.2 million or $0.02 on a basic and diluted per-share basis for the comparable period of 2015. Cash and short-term investment as at September 30 was $5.7 million.

That represents an increase of $4.6 million from the second quarter and an increase of $2.8 million compared to December 31, 2015. The increase in cash related to the monetization of the royalty on future sales for Forfivo through SWK Holdings for $6 million.

Finally in conclusion, we are pleased with the positive results of this quarter achieving profitability and positive EBITDA. The company is working hard to bring further visibility to marketplace in building a stronger presence in the capital market.

I will now turn the call back to Dr. Zerbe to close us out for the day.

Thank you, Andre. So to summarize again here are the key accomplishments of this past quarter.

We signed a term sheet for the commercialization of Rizaport in Korea. We successfully completed a Phase 1 study with Montelukast film.

We signed a definitive agreement with Chemo Group for three generic products and we monetize the U.S. revenue of Forfivo for $6 million and ended the quarter with a positive EBITDA.

None of this would have been possible without the hard work and dedication of our employees and I would therefore like to thank everybody here at IntelGenx for their hard work. And with that, I will now turn the call over for questions.

Thank you. Good evening, Dr.

Zerbe. How are you doing?

Doing good. Hi, RK.

Regarding the three products that you’re collaborating with Chemo, I know you are not disclosing what the products are but in general are they within the CNS arena are they completely different to any kind of characterization and what kind of market potential are we looking at when we look at this three molecules?

For CNS, the third one is not. So let me stay general here but two are CNS products and it is difficult for me to speculate on the sales potential, the brands are still growing, so I’m a little reluctant RK to provide any if you will guidance on the prospective sales of those products.

I think it’s quite premature.

Okay so from your tone, does this mean that you know you’re quite early in stages of even product development or you have done all the stuff that you need to do now that you finally got this thing partnered, these partnered that basically have to be done you know your initial clinical trials before you think about you know getting into a regulatory pathway?

All three of them are quite advanced and will be submitted to FDA something in 2017.

Okay and then on the relationship with the Spanish company, Horst, is this, I mean has there been any timeline changes or this is pretty much what you are expecting in terms of getting through the regulatory bodies over there and getting the transfer over, I am just trying to make sure I didn’t miss anything?

We are on track as far as our activities are concerned. There was a slight delay caused by Grupo Juste with respect to the submission of the national phase that I was reporting on earlier.

They were initially planning to submit the national phase document already in July if I recall correctly, and that for some reason was delayed and the submission then occurred in September. And as far as our activities here are concerned, we are completely on track.

Okay. And then on the manufacturing front, so where are you in the process of making sure that you have an operating fees or is there still any regulatory approvals that you need to get whether it’s from the Canadian authorities or the European authorities so that you can start making your commercial batches when needed.

As far as FDA is concerned, we don’t need anything in terms of licensing or approvals. We just need to be sure that we are GMP compliant.

The way FDA works is that they visit a company for a product related inspection, the so-called preapproval inspection, that happens anytime after the submission of the application and prior to approval. So we’re expecting FDA to show up here sometime in the first half of next year for preapproval inspection of the rizatriptan application and also a little later for preapproval inspection of the Tadalafil application.

But we do not acquire, I want to repeat that we do not require any licenses of any kind before FDA shows up.

And the last question from, sorry, you had something?

Yes, I reported earlier that we are in the process of applying for in establishment license with Health Canada that will not interfere with our FDA related activities.

Okay, the last question for me is on the South Korean partnership, so I am just trying to understand, in South Korea, the approval from EMA is that sufficient for them to launch the product there or do they need FDA approval?

I believe neither.

Okay.

They will need a Korean application and that would go independent from the trend [ph] the FDA application. However, we will of course provide our NDA application to that Korean partner Pharmatronic and that will guide them to the Korean application and that, by the same token a European application was based on our FDA submission.

Okay. Thank you very much Dr.

Zerbe and good luck, talk to you soon.

Thanks and you’re welcome RK.

Hi good afternoon, gentlemen. So first question is for Andre, on expenses, obviously, expenses were higher in the quarter and I am just wondering if there were some build out of the manufacturing facility and machinery expenses in the quarter and can we expect a decline going forward in those expenses or are they going to be pretty constant from where they are now based on the Phase 2 trial of Montelukast.

Can you discuss on expenses going forward?

I mean there was some nonrecurring expenses on the SG&A line, so and one of them is the, you know, all the cost related to the monetization. So that won’t you know come back, but obviously on SG&A it should not go up, it should probably go down.

On R&D though with all the project that we have and especially Montelukast where we will have to invest on the Phase 2 study and we have a few clinical trial that will be taking place in 2017 so R&D should probably keep increasing but SG&A should be under control.

Okay, so those two should offset each other basically is what you are saying?

It’s difficult to day but I would say that R&D will you know, we will be investing a lot of money in R&D in 2017. So will they offset each other?

It’s hard to say but I think that I am not sure it will.

So R&D might be greater than the decline in other expenses?

Yes, yes.

Also Horst, you mentioned that there is a hearings in the next couple of weeks on Suboxone. I am trying to understand so, there is two separate things going on as I understand it, one, you are asking them to reopen the prior lawsuit based on ruling in another trial for another Suboxone generic and the second one is an appeal.

So there is two separate things. What these hearings on the 16th and the 21st to the 23rd which what does that relate to?

Does that relate to the reopening of the previous trial or is it concerning the appeal?

Slight correction. Maybe I didn’t explain clearly enough in my previous report what’s going on.

There are three Orange Book patents which are currently being litigated under Paragraph 4 and as I mentioned on two of them we prevailed in the claim construction hearing, the third one was not in our favor and the appeal and the motion to reopen relate to this third Orange Book patent where we received an unfavorable ruling in the claim construction hearing. In addition to the paragraph for litigation, there is a non-p for [ph] litigation ongoing that relates to two process patents that Monosol owns and on which Monosol is suing us for infringement.

The claim construction of those two non-Orange Book patents had been held earlier this year and the ruling was really in our favor, it was clearly stated by the judge that we are with the process that we are applying not infringing on those two patents and then and now the final court hearing that will happen later this month. So the court hearing is on the two non-Orange Book process patents while the motion to reopen and the appeal relate to the three Orange Book patents.

This, is that.

Yes, very fine. Yes, so follow-up question.

So when would you expect to hear, do you have any timeframe as to when you would expect to hear on either the reopening of the case and or the appeal as to when that would start and when do you think all of these matters might be resolved to like within the timeframe on the resolution of the entire issue?

That is entirely speculative. The motion to reopen that’s actually something that doesn’t happen very often and so, we have no idea when that judge will respond to that motion.

I don’t have any information on that one. But I would for sure thing that within the next two or three months, we will know whether or not he’s going to reopen.

On the appeal, the rule of thumb is that an appeal proceeding in the federal circuit court is usually completed within 12 months. So the appeal was filed months ago – a couple of months ago so you can calculate from there that in the second half of 2017 will have a final decision on that case meaning on the appeal of the three Orange Book patents.

Okay but if they reopen the case obviously that would accelerate the resolution I would imagine?

That is correct and that would provided that we prevail in that reopening hearing that would put the appeal to rest because then there would be no more rounds to appeal on because the patent would have gone or not would have gone but the statement then would be that that we are not infringing.

Right, okay. And lastly, I was wondering, I know you guys are working on some feasibility studies they’ve discussed in the past on a couple of drugs.

Are we going to see meaningful revenues anytime soon from those feasibility studies?

Right now I don’t really know which feasibility studies you are referring to Pat.

Well I believe you were in – you’ve mentioned in the past that you’re speaking to other companies about possible drugs but you haven’t given us much information on those that, I felt there might be some R&D revenue once you are proving that these drugs are viable?

I wouldn’t expect short-term R&D revenue but the likelihood or at least one of those two efforts I know now what you’re referring to, the likelihood of at least one of these efforts to become established as a full-blown project with external funding has increased very significantly. So we expect that at least one of these two of these opportunities and we would be talking about a repurposing opportunity might materialize over the next maybe two, three months.

Very good, alright. Thank you very much.

You’re welcome, Pat.

Thanks, good afternoon.

Good afternoon.

Good afternoon. I am trying to reconcile the revenue for the quarter $1.8 million versus what was recognized on the deferred revenue for the Forfivo sale, and I just kind of match two together, there is like another 800,000 or so of revenue that was not from the Forfivo sale.

Could you tell us what that was related to?

They are related to upfront payments.

Could you tell us what drugs those are on?

I can’t really be specific on this because those – this is like confidential information. All I can say is that there are upfront.

Okay, well let me put it to, I will put it to you this way, let me start rephrase my question, I was estimating about the right number for the Forfivo?

Your estimate is very close. So yes, you are right on your estimate.

Right and I was using, I was expecting – essentially I was expecting some kind of upfront fee coming in from Grupo Juste in Spain on the Rizaport agreement and your new partner regarding these three drugs that are – that you are working on developing that relationship. Did you receive anything on those three drugs yet this quarter?

I mean, we signed at signature the upfront is usually either paid or payable. So yes, we would have received payment in the third quarter.

Okay, okay, so you did sign with them, so you do now have an agreement with them correct?

Yes, exactly. Grupo Juste and Chemo are signed agreements, so basically you know like they trigger upfront like we disclose on the press release, we just cannot say, you know, what is the amount per contract or per product?

Or per company is essentially what you are saying.

Or per company, yes, exactly.

Okay but the theoretical contributors to this revenue item would be either the Rizaport drug or the Chemo Company?

You’re right.

Okay so it’s a combination of those two.

But the number would be slightly higher than because if you look at the monetization, I mean, it’s $6 million over six quarter but to that amount you need to net Q2 royalty payments. So that brings down the amount of less than $1 million, so you know.

Right and I did that.

Almost like half and half [ph] what we got in terms of upfront and what we recognize that as to deferred revenue.

Right and we say half and half. The first half was on Forfivo amortization and the remainder was on these other drugs but you don’t want to break it out, I get it.

Exactly, yes.

I understand what you are saying, what you are driving at. Going back to for Forfivo, I mean, I realized that you sold the upfront royalties on the drug but there is a backend opportunity for the company assuming for Forfivo has greater than benchmark success, could you discuss so disclose what the sales were for the product in Q3?

I don’t think I’m entitled to disclose this number since we’re no longer like the transaction is now taking place between Edgemont Pharmaceutical and SWK Holdings, so I’m not at liberty to disclose what the numbers are.

Okay, because I was trying to kind of back of the envelope guess over time whether or not you are on track to receive some of those later royalties? You have potential milestones and also I guess percentage above the baseline, yes but later milestones?

Yes, because royalty obviously we sold the royalty stream. So, you know regardless whether they are greater or below our internal forecast before we sold the royalty that’s irrelevant for us, but it could be relevant in terms of if they achieve net sales you know that triggers future milestone then we would be entitled to 65% of those milestones but I think it’s all that premature at this time to speculate on that.

Right, but that’s why I was asking the question, so I noticed that was significant to be potentially, so you won’t be able to disclose that going forward, I understand what you are saying?

We will probably disclose if we achieve the milestone then we will have to disclose that we got revenue from a specific milestone but until we actually get there, I don’t think we are, I would say we are ready to disclose anything anymore.

Understood, understood. I think, you covered everything else I wanted to ask about right now, so I will let someone else go, thanks.

Thank you, Greg.

Hi, just a follow-up question, with just about $6 million on the balance sheet, can you just talk about how long that cash will last, do you think it will get you to, we need to be once revenue start to ramp what do you think you will have to raise money at the end of the road?

At this point we are comfortable with 18 months going forward but it is difficult because you know there is some ongoing negotiation right now for partnership that’s the name of the game at IntelGenx. This is the nature of our business, so the burn rate might be lower-than-expected.

Obviously we’re expecting growth in revenue next year. I can’t quantify that but you know we’re expecting growth.

So I don’t see the need to raise money but you know, like you know whether the only way I could see it is for strategic reason but I think that with our burn rate we’re fine for at least 18 months.

Great. Thanks very much, Andre.

Thank you.

Okay. So then, I would like to thank everybody again over their continued support and confidence in IntelGenx.

Thank you very much and bye-bye.