IntelGenx Technologies Corp. - Quarter Report: 2013 September (Form 10-Q)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2013

or

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to ________

Commission File Number 000-31187

INTELGENX TECHNOLOGIES CORP.
(Exact name of small business issuer as specified in its charter)

6425 Abrams, Ville Saint Laurent, Quebec H4S 1X9, Canada
(Address of principal executive offices)

(514) 331-7440
(Issuer's telephone number)

(Former Name, former Address, if changed since last report)

Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X]    No [_]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer”, “non-accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDS DURING THE PRECEDING FIVE YEARS

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Yes [_]    No [_]

APPLICABLE TO CORPORATE ISSUERS:

53,063,921 shares of the issuer’s common stock, par value $.00001 per share, were issued and outstanding as of November 7, 2013.

IntelGenx Technologies Corp.
Form 10-Q

TABLE OF CONTENTS

See accompanying notes

Approved on Behalf of the Board:

/s/ James B. Boudreau                     Director

/s/ Horst G. Zerbe                             Director

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See accompanying notes

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See accompanying notes

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See accompanying notes

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On August 6, 2013 the Company granted 35,000 stock options to a non-employee director to purchase common shares. The stock options are exercisable at $0.65 per share and vest over 2 years at 25% every six months. The stock options were accounted for at their fair value, as determined by the Black-Scholes valuation model, of approximately $10 thousand, using the following assumptions:

During the nine month period ended September 30, 2013 a total of 75,000 (2012 - Nil) stock options were exercised for 75,000 (2012 - Nil) common shares having a par value of $0 thousand in aggregate, for cash consideration of $31 thousand (2012 - $Nil), resulting in an increase in additional paid-in capital of $31 thousand (2012 - $Nil).

Compensation expenses for stock-based compensation of $82 thousand and $43 thousand were recorded during the nine month period ended September 30, 2013 and 2012 respectively. Of the amount expensed in 2013, $67 thousand (2012 - $41 thousand) relates to stock options granted to employees and directors, and $15 thousand (2012 - $1 thousand) relates to options granted to independent third party consultants. In addition, $1 thousand was expensed in 2012 related to stock options granted to investor relations firms as compensation for investor relation services. As at September 30, 2013, the Company has $202 thousand (2012 - $63 thousand) of unrecognized stock-based compensation.

Warrants

During the nine month period ended September 30, 2013 a total of 3,098,500 (2012 - 1,424,981) warrants were exercised for 3,098,500 (2012 - 945,393) common shares having a par value of $0 thousand in aggregate, for cash consideration of $1,465 thousand (2012 - $337 thousand), resulting in an increase in additional paid-in capital of $1,464 thousand (2012 - $337 thousand).

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Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations

Introduction to Management’s Discussion and Analysis

The purpose of this section, Management’s Discussion and Analysis of Financial Condition and Results of Operations, is to provide a narrative explanation of the financial statements that enables investors to better understand the business of the Company, to enhance the Company’s overall financial disclosures, to provide the context within which the Company’s financial information may be analyzed, and to provide information about the quality of, and potential variability of, the Company’s financial condition, results of operations and cash flows. Unless otherwise indicated, all financial and statistical information included herein relates to continuing operations of the Company. Unless otherwise indicated or the context otherwise requires, the words, “IntelGenx, “Company”, “we”, “us”, and “our” refer to IntelGenx Technologies Corp. and its subsidiaries, including IntelGenx Corp. This information should be read in conjunction with the accompanying unaudited Consolidated Financial Statements and Notes thereto.

Company Background

We are a drug delivery company established in 2003 and headquartered in Montreal, Quebec, Canada. Our focus is on the development of novel oral immediate-release and controlled-release products for the pharmaceutical market. Our business strategy is to develop pharmaceutical products based on our proprietary drug delivery technologies and, once the viability of a product has been demonstrated, to license the commercial rights to partners in the pharmaceutical industry. In certain cases, we rely upon partners in the pharmaceutical industry to fund development of the licensed products, complete the regulatory approval process with the U.S. Food and Drug Administration (“FDA”) or other regulatory agencies relating to the licensed products, and assume responsibility for marketing and distributing such products.

In addition, we may choose to pursue the development of certain products until the project reaches the marketing and distribution stage. We will assess the potential for successful development of a product and associated costs, and then determine at which stage it is most prudent to seek a partner, balancing such costs against the potential for additional returns earned by partnering later in the development process.

We have also undertaken a strategy under which we will work with pharmaceutical companies in order to develop new dosage forms for pharmaceutical products for which patent protection is nearing expiration. Under §(505)(b)(2) of the Food, Drug, and Cosmetics Act, the FDA may grant market exclusivity for a term of three to five years of exclusivity following approval of a listed drug that contains previously approved active ingredients but is approved in a new dosage, dosage form, route of administration or combination, or for a new use, the approval of which was required to be supported by new clinical trials, other than bioavailability studies, conducted by or for the sponsor.

We are currently continuing to develop the existing products in our pipeline and may also perform research and development on other potential products as opportunities arise.

We currently purchase and/or lease, on an as-needed basis, the equipment necessary for performing research and development activities related to our products.

We plan to hire new personnel, primarily in the areas of research and development, manufacturing, and administration on an as-needed basis as we enter into partnership agreements, establish our pilot plant VersaFilm™ manufacturing capability, and increase our research and development activities.

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Key Developments

ANDA for Buprenorphine/Naloxone Sublingual Film Product for the Treatment of Opiate Addiction:

On July 22, 2013 we announced that an Abbreviated New Drug Application (“ANDA”) has been submitted to the U.S. Food and Drug Administration (“FDA”) for approval of a generic formulation of buprenorphine and naloxone Sublingual Film, indicated for maintenance treatment of opioid dependence. The ANDA was filed by our U.S. based co-development and commercialization partner for this product, Par Pharmaceutical Companies, Inc.. The reference listed drug is Suboxone® (buprenorphine and naloxone) Sublingual Film.

According to IMS Health, U.S. retail sales of Suboxone® Sublingual Film were approximately $1.5 billion in 2012.

In accordance with confidentiality clauses contained in the co-development and commercialization agreement, the specifics of the product description and financial terms remain confidential. We will receive a share of the profits of commercialization, in addition to upfront and milestone payments.

The FDA approved Suboxone® Sublingual Film in October of 2002 for use in the treatment of opioid addiction. Suboxone® Sublingual Film is a registered trademark of Reckitt Benckiser Pharmaceuticals. Suboxone® Sublingual Film contains the two active ingredients: buprenorphine and naloxone.

Naloxone is used to block the effect of opioids. Buprenorphine is a partial opioid agonist that stimulates opioid receptors but does not produce the same effects as an opioid. In other words it does not produce a euphoric "high" effect. The combination of these two actives has been shown to be efficacious in managing the treatment of opioid addiction. Suboxone® Sublingual Film is most often taken sublingually (dissolved under the tongue). Taken properly, it can reduce opioid use, help patients to be successfully managed in an addiction rehabilitation program, and suppress the symptoms of opioid withdrawal. Suboxone® Sublingual Film is the most commonly prescribed medication that is administered to patients during the maintenance phase of treatment. Unlike methadone, Suboxone® Sublingual Film has a lower potential for overdose and abuse. This enables Certified Doctors, in certain circumstances, to prescribe take home supplies of Suboxone® Sublingual Film.

On August 26, 2013 we announced that, in response to filing of the ANDA, we were named as a codefendant in a lawsuit pursuant to Paragraph IV litigation filed by Reckitt Benckiser Pharmaceuticals and Monosol RX in the U.S. District Court for the District of Delaware alleging infringement of U.S. Patent Nos. 8,475,832 and 8,017,150, each of which relate to Suboxone® Sublingual Film. We believe the ANDA product does not infringe those or any other patents, and will vigorously defend ourselves in this matter. Since Paragraph IV litigation is a regular part of the ANDA process, we do not expect any unanticipated impact on our already planned development schedule. In accordance with the terms of the co-development and commercialization agreement, the costs of defending this litigation will be borne by Par Pharmaceutical Inc.

On October 8, 2013 we received confirmation that Actavis plc has filed an ANDA with the FDA seeking approval to market Buprenorphine Hydrochloride and Naloxone Hydrochloride Sublingual Film 2 mg/0.5 mg and 8 mg/2 mg. Reckitt Benckiser Pharmaceuticals, Inc., RB Pharmaceuticals Limited and MonoSol Rx, LLC filed suit against Actavis on October 8, 2013, in the U.S. District Court for the District of Delaware seeking to prevent Actavis from commercializing its ANDA product prior to the expiration certain of U.S. patents. The lawsuit was filed under the provisions of the Hatch-Waxman Act, resulting in a stay of final FDA approval of Actavis' ANDA for up to 30 months from the date the plaintiffs received notice of Actavis' ANDA filing or until final resolution of the matter before the court, whichever occurs sooner, subject to any other exclusivities. Based on available information, including a submission date listed on FDA's Paragraph IV Patent Certifications web site that is consistent with the date of Actavis' ANDA filing, Actavis believes it may be a "first applicant" to file an ANDA for a generic version of Suboxone® Sublingual Film and, should its ANDA be approved, may be entitled to 180 days of generic market exclusivity.

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NDA for Anti-Migraine VersaFilm™ Oral Film Product:

On June 18, 2013 we announced that the FDA has assigned a Prescription Drug User Fee Act ("PDUFA") action date of February 3, 2014 for the review of our New Drug Application ("NDA") for the marketing approval of our anti-migraine VersaFilm™ oral film product. We had previously announced that, together with our co-development partner RedHill Biopharma Ltd ("RedHill"), we had submitted a 505(b)(2) NDA to the FDA for a novel, oral thin-film formulation, based on our proprietary VersaFilm™ technology containing Rizatriptan, the active drug in Merck & Co ("Merck") Maxalt-MLT® orally disintegrating tablets. According to Merck's most recent annual report, sales of Maxalt® were $638 million in 2012. The FDA confirmed that our application is sufficiently complete to permit a substantive review in accordance with the FDA's "standard" classification process.

Forfivo XL®:

On August 22, 2013 we announced receipt of a Paragraph IV Certification Letter from Wockhardt Bio AG, advising of the submission of an ANDA to the FDA requesting authorization to manufacture and market generic versions of Forfivo XL® 450 mg capsules in the United States.

IntelGenx intends to vigorously enforce its intellectual property rights for Forfivo XL® and will pursue all available legal and regulatory pathways in defense of Forfivo XL®, which is currently protected by an issued patent listed in the FDA's Approved Drug Products List (Orange Book).

Currency rate fluctuations

Our operating currency is Canadian dollars, while our reporting currency is U.S. dollars. Accordingly, our results of operations and balance sheet position have been affected by currency rate fluctuations. The following management discussion and analysis takes this into consideration whenever material.

Results of Operations for the nine month period ended September 30, 2013 compared with the nine month period ended September 30, 2012.

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Revenue

Total revenue in the first nine months of 2013 increased to $804 thousand, compared with $120 thousand in the same period of 2012, and represents an increase of $684 thousand, or 570%.

Revenue for the 9 months ended September 30, 2013 includes $256 thousand related to a development milestone for our VersaFilm™ buprenorphine/naloxone product for the treatment of opiate addiction. The milestone became due following the successful completion of the pivotal bioequivalence study.

Also included in revenue for the first nine months of 2013 is $201 thousand related to a development milestone for our anti-migraine VersaFilm™ oral film product. The milestone became due following confirmation that our NDA submission to the FDA is sufficiently complete to permit a substantive review in accordance with the FDA's "standard" classification process.

Revenue recorded in the first 9 months of 2013 also includes $347 thousand related to Forfivo XL®, our first FDA approved product, which was launched in October 2012 under a licensing partnership with Edgemont Pharmaceuticals LLP (“Edgemont”). Upon entering into the licensing agreement, Edgemont paid us an upfront fee of $1 million, which we recognized as deferred license revenue. The deferred license revenue is amortized in income over the period where sales of Forfivo XL® are expected to be exclusive. As a result of this policy, we recognized $230 thousand in income during the first nine months of 2013. In addition, we recognized approximately $117 thousand of royalty income earned from the sale of Forfivo XL®. The royalties relate to sales of Forfivo XL® by Edgemont during the first nine months post product launch. Forfivo XL® is indicated for the treatment of Major Depressive Disorder (“MDD”) and is the only extended-release bupropion HCl product to provide a once-daily, 450mg dose in a single tablet.

Sales levels achieved for Forfivo XL®, and related royalty income, have been lower than anticipated in the first nine months of 2013. Management is actively taking steps to accelerate sales growth of Forfivo XL®.

Revenue for the nine months ended September 30, 2012 included a $100 thousand development milestone in respect of our anti-migraine VersaFilm™ oral film product. The milestone became due following the successful completion of the pivotal bioequivalence study.

Research and Development (“R&D”) Expenses

R&D expenses, net of R&D investment tax credits, totaled $406 thousand in the nine months ended September 30, 2013. This represents a decrease of $432 thousand, or 52%, to the net amount of $838 thousand expensed in the same period of last year.

The decrease in R&D expenses is primarily related to i) approximately $229 thousand of costs incurred in 2012 that were associated with pilot clinical studies that were not repeated in 2013, ii) the reversal of approximately $112 thousand of costs accrued for the technical transfer of activities in preparation for manufacturing of Forfivo XL® to our Contract Manufacturing Organization that were recorded in fiscal 2012 and, following negotiation, subsequently reversed in April 2013, and iii) reduced salaries costs of $42 thousand.

Included within R&D expenses for the first nine months of 2013 are R&D salaries of $427 thousand, of which approximately $6 thousand represents non-cash compensation. This compares to R&D salaries of $469 thousand in the first nine months of 2012, of which approximately $11 thousand represented non-cash compensation. The decrease in R&D salaries relates to a reduction of one headcount since Q4, 2012, together with a temporary vacancy during the second quarter of 2013.

In the nine months ended September 30, 2013 we recorded estimated research and development tax credits and refunds of $102 thousand, compared with $75 thousand recorded in the same period of the previous year.

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Selling, General and Administrative (“SG&A”) Expenses

SG&A expenses were $1,341 thousand in the first nine months of 2013 compared with $1,175 thousand in the same period of the previous year. The increase is primarily attributable to the addition of Dr. Rajiv Khosla to our management team initially in a consulting capacity through to April, and thereafter as an executive of the Company.

Included in SG&A expenses are approximately $53 thousand (2012: $9 thousand) in non-cash compensation from options granted to management employees in 2011, 2012 and 2013, $20 thousand (2012: $13 thousand) in non-cash compensation from options granted to non-employee directors in 2011, and $15 thousand (2012: $Nil) in non-cash compensation from options granted to consultants in 2012.

Amortization of intangible assets

The expense recorded to amortize intangible assets during the first nine months of 2013 totaled $29 thousand, compared with $Nil during the same period of last year. The expense relates to the amortization of NDA acquisition costs in respect of the final progress payment to acquire 100% ownership of Forfivo XL®. Commercialization of Forfivo XL® in October 2012 triggered amortization of the asset over its estimated useful life of 39 months.

Share-Based Compensation Expense, Warrants and Stock Based Payments

Share-based compensation expense, warrants and share-based payments totaled $82 thousand for the nine months ended September 30, 2013, compared with $43 thousand for the nine months ended September 30, 2012.

We expensed approximately $59 thousand in the first nine months of 2013 for options granted to our employees in 2011, 2012 and 2013 under the 2006 Stock Option Plan, and approximately $8 thousand for options granted to non-employee directors in 2011, compared with $22 thousand and $20 respectively that was expensed in the same period of the previous year.

We also expensed $15 thousand in the first nine months of 2013 for options granted to consultants and $1 thousand in the first nine months of 2012 for options granted to investor relation firms for investor relation services.

There remains approximately $202 thousand in stock based compensation to be expensed in fiscal 2013 through 2015, of which $200 thousand relates to the issuance of options to employees and directors of the Company during 2011, 2012 and 2013 and $2 thousand relates to the issuance of options to consultants in 2012. We anticipate the issuance of additional options and warrants in the future, which will continue to result in stock-based compensation expense.

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Key items from the Balance Sheet

Current Assets

Current assets totaled $3,040 thousand as at September 30, 2013 compared with $3,656 thousand at December 31, 2012. The decrease of $616 thousand is attributable to a decrease in accounts receivable of approximately $1,227 thousand and a decrease in investment tax credits receivable of approximately $1 thousand, partly offset by an increase in cash and cash equivalents of approximately $492 thousand and an increase in prepaid expenses of approximately $120 thousand.

Cash and cash equivalents totaled $2,551 thousand as at September 30, 2013 representing an increase of $492 thousand compared to the balance of $2,059 thousand as at December 31, 2012. The increase in cash on hand relates to net cash provided by financing activities of $1,496 thousand, partly offset with net cash used by operating activities of $725 thousand, net cash used in investing activities of $260 thousand, and an unrealized foreign exchange loss of $19 thousand.

Accounts receivable totaled $55 thousand as at September 30, 2013 compared with $1,282 thousand as at December 31, 2012. Included within the accounts receivable balance as at December 31, 2012 is a project development milestone of $1 million that was invoiced to Edgemont Pharmaceuticals in the fourth quarter of 2012 for the launch of Forfivo XL®. We received payment against this invoice in February 2013.

As of September 30, 2013, prepaid expenses totaled $222 thousand compared with $102 thousand as of December 31, 2012. The increase relates to amounts paid for the preparation of our financing activities, which are expected to conclude in the fourth quarter of 2013.

R&D investment tax credits receivable totaled $212 thousand as at September 30, 2013 compared with $213 thousand as at December 31, 2012.

Leasehold Improvements and Equipment

As at September 30, 2013, the net book value of leasehold improvements and equipment amounted to $608 thousand, compared to $387 thousand at December 31, 2012. In the nine months ended September 30, 2013 additions to assets totaled $260 thousand and comprised $252 thousand for pilot plant manufacturing equipment for our VersaFilm™ products, $5 thousand for equipment in our R&D laboratories, and $3 thousand for computer equipment. Depreciation on leasehold improvements and equipment in the nine months ended September 30, 2013 amounted to $24 thousand and an unrealized foreign exchange loss of $15 thousand was recorded.

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Intangible Assets

As at September 30, 2013 NDA acquisition costs of $87 thousand (December 31, 2012 - $116 thousand) were recorded as intangible assets on our balance sheet and are related to the acquisition of 100% ownership of Forfivo XL®. The asset is being amortized over its expected useful life of 39 months. Amortization commenced upon commercial launch of Forfivo XL®™ in the fourth quarter of 2012.

Current Liabilities

Current liabilities totaled $621 thousand as at September 30, 2013 (December 31, 2012 - $1,366 thousand) and consisted of accounts payable and accrued liabilities of $313 thousand (December 31, 2012 - $1,058 thousand) and the current portion of deferred license revenue of $308 thousand (December 31, 2012 - $308 thousand).

Accounts payable and accrued liabilities of $313 thousand as at September 30, 2013 (December 31, 2012 - $1,058 thousand) include approximately $39 thousand related to research and development activities, approximately $123 thousand relates to professional fees, and approximately $135 thousand relates to accrued payroll liabilities. The decrease in accounts payable and accrued liabilities as at September 30, 2013, compared with December 31, 2012, primarily relates to the payment in the first quarter of 2013 of invoices received during the fourth quarter of 2012 that were outstanding as at December 31, 2012 in respect of R&D activities.

Deferred License Revenue

Pursuant to the execution of a licensing agreement for Forfivo XL®, we received an upfront fee from Edgemont Pharmaceuticals in the first quarter of 2012, which we recognized as deferred license revenue. The deferred license revenue is amortized in income over the period where sales of Forfivo XL® are expected to be exclusive. As a result of this policy, we have a deferred revenue balance of $694 thousand at September 30, 2013 (December 31, 2012: $923 thousand) that has not been recognized as revenue, with $386 thousand recognized as the non-current portion and $308 thousand recognized in current assets as the current portion, compared with $615 thousand and $308 thousand respectively as at December 31, 2012.

Shareholders’ Equity

As at September 30, 2013 we had accumulated a deficit of $15,458 thousand compared with an accumulated deficit of $14,463 thousand as at December 31, 2012. Total assets amounted to $3,735 thousand and shareholders’ equity totaled $2,728 thousand as at September 30, 2013, compared with total assets and shareholders’ equity of $4,159 thousand and $2,178 thousand respectively, as at December 31, 2012.

Capital Stock

As at September 30, 2012 capital stock amounted to $531 compared to $499 at December 31, 2012. The increase reflects the issuance of 3,098,500 shares and 75,000 shares related to the exercise of warrants and stock options respectively, with all shares issued at par value of $0.00001. Capital stock is disclosed at its par value with the excess of proceeds shown in Additional Paid-in-Capital.

Additional Paid-in-Capital

Additional paid-in capital totaled $17,919 thousand at September 30, 2013, compared with $16,342 thousand at December 31, 2012. The increase relates in part to $82 thousand for stock based compensation, of which $15 thousand is attributable to the amortization of stock options granted to consultants, and $67 thousand is attributable to the amortization of stock options granted to employees and directors. Additional paid-in capital increased further by $1,464 thousand for warrants exercised, and by $31 thousand for options exercised.

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Key items from the Statement of Cash Flows

Statement of cash flows

Net cash used by operating activities was $725 thousand in the nine months ended September 30, 2013, compared with $944 thousand for the nine months ended September 30, 2012. In the first nine months of 2013, net cash used by operating activities consisted of an operating loss of $860 thousand (2012 - $1,842 thousand) net of non-cash related expenses of approximately $135 thousand (2012 - $70 thousand), and an increase in non-cash operating elements of working capital of $135 thousand (2012 - $898 thousand).

Operating activities will continue to consume our available funds until we are able to generate increased revenues.

The net cash provided by financing activities was $1,496 thousand in the first nine months of 2013, compared with $337 thousand provided in the same period of the previous year. The net cash provided in the nine months ending September 30, 2013 resulted from the exercise of warrants ($1,465 thousand) and options ($31 thousand), whereas the cash provided in the same period of the previous year resulted entirely from the exercise of warrants.

Net cash used in investing activities amounted to $260 thousand in the nine months ended September 30, 2013 compared with $248 thousand in the same period of the previous year. Included within the use of funds in the first nine months of 2013 is an investment of approximately $252 thousand in new equipment for our VersaFilm™ technology, compared with an investment of approximately $207 thousand in the first nine months of 2012.

The balance of cash and cash equivalents as at September 30, 2013 amounted to $2,551 thousand, compared with $2,768 thousand at September 30, 2012.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Forward-Looking and Cautionary Statements

This report contains certain forward-looking statements that involve risks and uncertainties relating to, among other things, our future financial performance or future events. Forward-looking statements give management’s current expectations, plans, objectives, assumptions or forecasts of future events. All statements other than statements of current or historical fact contained in this Form 10Q, including statements regarding our future financial position, business strategy, budgets, projected costs and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “estimate,” “plans,” “potential,” “projects,” “ongoing,” “expects,” “management believes,” “we believe,” “we intend,” and similar expressions. These statements involve known and unknown risks, estimates, assumptions and uncertainties that could cause actual results to differ materially from the results set forth in this Annual Report. You should not place undue reliance on these forward-looking statements. You should be aware that our actual results could differ materially from those contained in the forward-looking statements due to a number of factors such as:
continued development of our technology;
lack of product revenues
successful completion of clinical trials and obtaining regulatory approval to market
ability to protect our intellectual property
dependence on collaborative partners
ability to generate positive cash flow
ability to raise additional capital if and when necessary
dependence on key personnel;
competitive factors;
the operation of our business; and
general economic conditions.

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These factors should be considered carefully and readers are cautioned not to place undue reliance on such forward looking statements. These forward-looking statements speak only as of the date on which they are made, and except to the extent required by federal securities laws, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

Item 3. Controls and Procedures.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of management, including our chief executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934. Based upon that evaluation, our chief executive officer and principal financial officer concluded that our disclosure controls and procedures are effective to cause the material information required to be disclosed by us in the reports that we file or submit under the Exchange Act to be recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. There have been no significant changes in our internal controls or in other factors which could significantly affect internal controls subsequent to the date we carried out our evaluation.

PART II

Item 1. Legal Proceedings

This Item is not applicable

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

This Item is not applicable.

Item 3. Defaults Upon Senior Securities

This Item is not applicable.

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Item 4. (Reserved)

Item 5. Other Information

This Item is not applicable.

Item 6. Exhibits

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

INTELGENX TECHNOLOGIES CORPORATION

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