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IT

IntelGenx Technologies Corp. (IGXT)·Q4 2015 Earnings Summary

Executive Summary

  • Q4 2015 revenue was $1.50M, up 82% year-over-year, but down versus a record Q3 ($2.38M), driven by milestone recognition cadence and Forfivo royalties .
  • The quarter marked a second consecutive profitability: net comprehensive income of $0.233M; Adjusted EBITDA of $0.429M versus ($0.225M) in Q4 2014, reflecting stronger Forfivo net sales and milestone revenue .
  • Forfivo net sales rose 24% sequentially to $3.0M (gross $5.4M), with prescriber base growth and improved net-to-gross dynamics; prescriptions reached 12,161 in Q4 vs 11,289 in Q3 .
  • Wall Street consensus (S&P Global) for IGXT Q4 2015 was unavailable; directional narrative suggests continued estimate upside risk tied to Forfivo momentum and milestone timing; the company provided no formal financial guidance .

What Went Well and What Went Wrong

What Went Well

  • Forfivo momentum: Net sales increased 24% q/q to $3.0M, with gross sales at $5.4M and a larger prescriber base; management sees Edgemont optimizing marketing reach and expects continued growth .
  • Profitability inflection: Q4 Adjusted EBITDA of $0.429M and net comprehensive income of $0.233M, marking two consecutive profitable quarters .
  • Strategic progress: Construction of the new manufacturing and laboratory facilities completed; management expects full operations by 2017 and highlights capability expansion (including handling solvents) for future products .

What Went Wrong

  • Sequential revenue decline vs. Q3 peak: Revenues were $1.50M vs. $2.38M in Q3, reflecting timing of milestone recognition and mix; analysts probed revenue composition (milestone vs. royalties) indicating sensitivity to non-recurring items .
  • RIZAPORT U.S. delay: FDA issues with the original API supplier necessitated resubmission batches with a “clean” supplier; U.S. timelines shifted, with a re-submission planned for Q4 2016 and ~6-month review thereafter .
  • Limited guidance transparency: Management avoided specific revenue/milestone guidance for 2016, constraining visibility; capital spending and debt questions highlighted balance sheet needs as facility equips through 2016 .

Financial Results

MetricQ4 2014Q3 2015Q4 2015
Revenue ($USD Millions)$0.825 $2.38 $1.50
Net Comprehensive Income ($USD Millions)($0.339) $1.35 $0.233
Adjusted EBITDA ($USD Millions)($0.225) N/A$0.429
EPS (Basic/Diluted, $)N/A$0.02 N/A

Segment/KPI breakdown:

KPIQ3 2015Q4 2015
Forfivo Net Sales ($USD Millions)$2.5 $3.0
Forfivo Gross Sales ($USD Millions)$4.7 $5.4
Prescriptions (count)11,289 12,161

Additional operating KPIs:

KPIQ2 2015Q3 2015Q4 2015
Cash and Cash Equivalents ($USD Millions)$2.70 $2.26 $2.87
Edgemont Milestone Cash Received ($USD Millions)N/A$1.00 $1.00

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Formal Financial Guidance (Revenue/EPS)FY 2016NoneNone; management refrained from guidance Maintained (no guidance)
RIZAPORT US NDA Re-submissionQ4 2016 targetPrior workstreams ongoingRe-submission planned Q4 2016; Level 2 FDA review (~6 months) Timeline clarified
Manufacturing Facility OperationsBy 2017Construction ongoingConstruction completed; full operations expected by 2017 Timeline maintained/confirmed
Opioid Dependence ANDA Litigation OutcomeMid–Q3 2016 expected rulingOngoing litigationCourt case occurred Dec 2015; ruling expected by Q3 2016; confident in outcome Timeline clarified

Earnings Call Themes & Trends

TopicQ2 2015 (Prior-2)Q3 2015 (Prior-1)Q4 2015 (Current)Trend
Forfivo performanceQ2 sales +19% q/q; milestone triggered ($3M) Net $2.5M; gross $4.7M; +16% q/q; pricing helped net/gross Net $3.0M; gross $5.4M; +24% q/q; prescriber base up; improved net/gross Strengthening sequentially
Manufacturing facilityBuild underway; financing details; equipment orders Progress on offices/lab; solvent capability added Construction completed; critical equipment arriving; operations targeted 2017 Execution on track
RIZAPORT (EU/US)EU review underway; US resubmission costs discussion EU approval letter; national pricing; partner discussions US re-submission planned Q4 2016; clean supplier; ~6-month review EU progressing; US timeline reset
PAR/Endo projects3 PAR projects advancing; ANDA timelines One project likely returned; litigation/tentative approval expectations Two projects returned; retained data; opioid dependence case timing Portfolio reshaped; key project intact
Tadalafil (ED film)Pilot bio study: bioequivalent; plan 505(b)(2) NDA 2016 Progress; partnering strategy forming Strong IP prep; non-infringement opinions; engaging top BD firm Advancing toward NDA/partner
Loxapine (CNS)Not covered in Q2Faster onset targeted; Phase 1/2a plans Improved bioavailability; further optimization for faster onset Advancing formulation/clinical path
Revenue visibility/guidanceH2 2015 growth expected; milestone recognition mechanics Strong Q3 driven by milestone recognition No guidance; revenue mix clarified in Q&A Limited formal visibility

Management Commentary

  • “Our continued sales growth of Forfivo has enabled us to achieve two consecutive quarters of profitability… Both these strategic initiatives will enable us to become a global leader in pharmaceutical oral film development and manufacturing.” — Dr. Horst G. Zerbe, President & CEO .
  • “We are focused on a strong financial discipline in managing our expenses and ensuring high standards of financial controls be implemented throughout the organization.” — Andre Godin, EVP & CFO .
  • “We are now in the process of manufacturing submission batches and plan to file a re-submission of the NDA with the FDA in the fourth quarter of 2016… approximately six months [Level 2 review].” — Horst Zerbe on RIZAPORT (US) .
  • “The relationship with PAR remains very strong… IntelGenx retains full ownership of the data… The court case took place in December 2015 and we expect a ruling… by the third quarter of 2016 and we are confident we will prevail.” — Horst Zerbe on opioid dependence and PAR projects .

Q&A Highlights

  • Revenue composition: Analysts probed Q4 revenue mix; management indicated most revenue came from milestones and Forfivo royalties, consistent with recognition of 3/6 of the $2.0M tranche in Q4 .
  • Prescriptions and net/gross dynamics: Scripts were 12,161 in Q4 vs 11,289 in Q3; management highlighted a slight improvement in net-to-gross ratio and ongoing collaboration with Edgemont to optimize net sales .
  • Capital spending and debt: Facility largely complete; remaining equipment expected in Q1/Q2 2016; total debt projected in the area of $3.0–$3.5M as the project finishes .
  • Guidance stance: Management avoided specific 2016 revenue/milestone guidance; potential milestones and deals could occur, but no commitments were made .
  • RIZAPORT (US) supplier: U.S. submission will rely on the new “clean” supplier; the original supplier remains relevant in Europe but is written off for U.S. .

Estimates Context

  • Wall Street consensus (S&P Global) for IGXT Q4 2015 and FY 2015 was unavailable via our S&P Global integration. Results are benchmarked against prior quarters and prior year rather than published consensus. The company provided no formal financial guidance in Q4 2015 .

Key Takeaways for Investors

  • Forfivo is the core near-term driver: sequential net sales growth (+24% q/q) and prescriber base expansion underpin profitability, with net/gross ratio improving modestly; continued momentum at Edgemont is the principal operational lever .
  • Profitability durability: Two consecutive profitable quarters, Q4 Adjusted EBITDA of $0.429M and net income of $0.233M, suggest operating leverage as royalties scale; watch for milestone timing, which can skew quarterly revenue .
  • Facility catalyst: Construction complete; full operations targeted by 2017 should reduce CMO dependence, protect IP, and enable in-house batch manufacturing (including solvent-based processes), potentially improving margins and deal economics .
  • Pipeline optionality: Tadalafil with strong IP positioning and targeted 505(b)(2) path; RIZAPORT resubmission timing clarified for Q4 2016; opioid dependence litigation outcome expected by Q3 2016 — any positive ruling or partner signings are catalysts .
  • Visibility remains limited without formal guidance: Revenue mix includes non-recurring milestones; investors should monitor Edgemont sell-through, script trends, and milestone triggers to gauge intra-year variability .
  • Balance sheet: Year-end cash of $2.87M; debt expected around $3–$3.5M as equipment arrives; watch capital needs as facility ramps .
  • Near-term trading implications: Expect sensitivity to updates on RIZAPORT U.S. resubmission progress, opioid litigation timeline, and Forfivo script/net sales cadence; medium-term thesis hinges on facility-enabled manufacturing economics and pipeline partnering conversion .