IntelGenx Technologies Corp. - Quarter Report: 2023 March (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 March 31, 2023

[ ] 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)

Delaware	87-0638336
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

6420 Abrams, Ville Saint Laurent, Quebec H4S 1Y2, 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.

Large accelerated filer[ ]	Accelerated filer [ ]
Non-accelerated filer [ ] (Do not check if a smaller reporting company)	Smaller reporting company [X]

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 [ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

APPLICABLE TO CORPORATE ISSUERS:

174,646,197 shares of the issuer's common stock, par value $.00001 per share, were issued and outstanding as of May 10, 2023.

IntelGenx Technologies Corp.

Form 10-Q

TABLE OF CONTENTS

	PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	4

	Consolidated Balance Sheet	4

	Statement of Shareholders' Equity	5

	Statement of Operations and Comprehensive Loss	6

	Statement of Cash Flows	7

	Notes to Financial Statements	8

Item 2.	Management's Discussion and Analysis and Results of Operations	21

Item 3.	Controls and Procedures	33

	PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	33

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33

Item 3.	Defaults upon Senior Securities	33

Item 4.	Reserved	33

Item 5.	Other Information	33

Item 6.	Exhibits	33

	Signatures	34

IntelGenx Technologies Corp.

Consolidated Interim Financial Statements

March 31, 2023

(Expressed in U.S. Funds)

(Unaudited)

Contents

Consolidated Balance Sheet	2

Consolidated Statement of Shareholders' Deficit	3

Consolidated Statement of Comprehensive Loss	4

Consolidated Statement of Cash Flows	5

Notes to Consolidated Financial Statements	6 - 18

IntelGenx Technologies Corp.

Consolidated Balance Sheet

(Expressed in Thousands of U.S. Dollars ($000's) Except Share and Per Share Data)

(Unaudited)

		March 31, 2023			December 31, 2022

Assets

Current

Cash	$	2,520		$	1,210
Short-term investments		1,320			1,317
Accounts receivable		590			709
Prepaid expenses		212			137
Investment tax credits receivable		196			159
Security deposits		194			194
Inventory (note 4)		70			62

Total current assets		5,102			3,788

Leasehold improvements and equipment, net (note 5)		4,318			4,425

Security deposits		245			245

Operating lease right-of-use-asset		676			732

Total assets	$	10,341		$	9,190

Liabilities

Current
Accounts payable and accrued liabilities		2,514			2,102
Current portion of operating lease liability (note 12)		238			236
Current portion of finance lease liability (note 12)		37			36
Current portion of long-term debt (note 7)		8,500			-

Total current liabilities		11,289			2,374

Long-term debt (note 7)		-			5,500

Convertible notes (note 8)		4,957			4,272

Operating lease liability (note 12)		375			425

Finance lease liability (note 12)		33			42

Total liabilities		16,654			12,613

Contingencies (note 15)

Shareholders' deficit

Capital stock, common shares, $0.00001 par value; 450,000,000 shares authorized; 174,646,196 shares issued and outstanding (2022: 174,646,196 common shares) (note 9)		1			1

Additional paid-in capital (note 10)		67,370			67,340

Accumulated deficit		(71,454	)		(68,530	)

Accumulated other comprehensive loss		(2,230	)		(2,234	)

Total shareholders' deficit		(6,313	)		(3,423	)

	$	10,341		$	9,190

See accompanying notes

Approved on Behalf of the Board:

/s/ Bernd J. Melchers Director /s/ Horst G. Zerbe Director

IntelGenx Technologies Corp.

Consolidated Statement of Shareholders' Deficit

For the Period Ended March 31, 2023

(Expressed in Thousands of U.S. Dollars ($000's) Except Share and Per Share Data)

(Unaudited)

										Accumulated
					Additional					Other			Total
	Capital Stock				Paid-In		Accumulated			Comprehensive			Shareholders'
	Number		Amount		Capital		Deficit			Loss			Deficit

Balance - December 31, 2022	174,646,196	$	1	$	67,340	$	(68,530	)	$	(2,234	)	$	(3,423	)

Other comprehensive income	-		-		-		-			4			4

Agents' warrants issued (note 8)	-		-		19		-			-			19

Stock-based compensation (note 10)	-		-		11		-			-			11

Net loss for the period	-		-		-		(2,924	)		-			(2,924	)

Balance - March 31, 2023	174,646,196	$	1	$	67,370	$	(71,454	)	$	(2,230	)	$	(6,313	)

See accompanying notes

IntelGenx Technologies Corp.

Consolidated Statement of Comprehensive Loss

(Expressed in Thousands of U.S. Dollars ($000's) Except Share and Per Share Data)

(Unaudited)

		For the Three-Month Period
		Ended March 31,
		2023			2022

Revenues (note 11)	$	162		$	237

Total Revenues		162			237

Expenses

Research and development expense		822			798
Manufacturing expenses		472			470
Selling, general and administrative expense		1,295			1,084
Depreciation of tangible assets		192			195

Total expenses		2,781			2,547

Operating loss		(2,619	)		(2,310	)

Interest income		14			1

Financing and interest expense		(319	)		(377	)

Net financing and interest expense		(305	)		(376	)

Net Loss		(2,924	)		(2,686	)

Other Comprehensive Loss
Foreign currency translation adjustment		1			17
Change in fair value		3			(349	)
		4			(332	)

Comprehensive loss	$	(2,920	)	$	(3,018	)

Basic and Diluted Weighted Average Number of Shares Outstanding		174,646,196			154,595,511

Basic and Diluted Loss Per Common Share (note 14)	$	(0.02	)	$	(0.02	)

See accompanying notes

IntelGenx Technologies Corp.

Consolidated Statement of Cash Flows

(Expressed in thousands of U.S. Dollars ($000's) Except Share and Per Share Data)

(Unaudited)

		For the Three-Month Period
		Ended March 31,
		2023			2022

Funds (used) provided -

Operating activities

Net loss	$	(2,924	)	$	(2,686	)
Depreciation of tangible assets		192			195
Stock-based compensation		11			32
Accretion expense		48			91
DSU expense		144			68
Lease non-cash expense		1			1
		(2,528	)		(2,299	)

Changes in non-cash items related to operations:
Accounts receivable		119			(74	)
Prepaid expenses		(75	)		(27	)
Investment tax credits receivable		(37	)		211
Inventory		(8	)		(26	)
Accounts payable and accrued liabilities		267			(21	)
Deferred revenues		-			(51	)
Net change in non-cash items related to operations		266			12
Net cash used in operating activities		(2,262	)		(2,287	)

Financing activities
Finance lease payments		(9	)		(9	)
Issuance of loan		3,000			3,000
Net proceeds from convertible notes		697			-
Transaction costs of convertible notes		(40	)		-
Net cash provided by financing activities		3,648			2,991

Investing activities
Additions to leasehold improvements and equipment		(74	)		(64	)
Redemption of short-term investments		-			5,719
Acquisition of short-term investments		-			(3,700	)
Net cash (used in) provided by investing activities		(74	)		1,955

Increase in cash		1,312			2,659

Effect of foreign exchange on cash		(2	)		10

Cash

Beginning of period		1,210			3,945

End of period	$	2,520		$	6,614

See accompanying notes

IntelGenx Technologies Corp.

Notes to Consolidated Interim Financial Statements
March 31, 2023
(Expressed in U.S. Funds)
(Unaudited)

1. Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete consolidated financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal and recurring nature.

These financial statements should be read in conjunction with the audited consolidated financial statements at December 31, 2022. Operating results for the three months ended March 31, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. IntelGenx Technologies Corp. (and collectively with IntelGenx Corp., our wholly-owned Canadian subsidiary, "IntelGenx" or the "Company") prepares its consolidated financial statements in accordance with accounting principles generally accepted in the United States of America ("USA"). This basis of accounting involves the application of accrual accounting and consequently, revenues and gains are recognized when earned, and expenses and losses are recognized when incurred.

The consolidated financial statements include the accounts of IntelGenx Technologies Corp. and IntelGenx Corp. On consolidation, all inter-entity transactions and balances have been eliminated.

The financial statements are expressed in U.S. funds.

Management has performed an evaluation of the Company's activities through the date and time these financial statements were issued and concluded that there are no additional significant events requiring recognition or disclosure.

2. Going Concern

The Company has financed its operations to date primarily through public offerings of its common stock, proceeds from issuance of convertible notes and debentures, bank loans, royalty, up-front and milestone payments, license fees, proceeds from exercise of warrants and options, and research and development revenues. The Company has devoted substantially all of its resources to its drug development efforts, conducting clinical trials to further advance the product pipeline, the expansion of its facilities, protecting its intellectual property and general and administrative functions relating to these operations. The future success of the Company is dependent on its ability to develop its product pipeline and ultimately upon its ability to attain profitable operations. As of March 31, 2023, the Company had cash and short-term investments totaling approximately $3,840. The Company does not have sufficient existing cash and short-term investments to support operations for the next year following the issuance of these financial statements. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans to alleviate these conditions include pursuing one or more of the following steps to raise additional funding, none of which can be guaranteed or are entirely within the Company's control:

Raise funding through the possible sale of the Company's common stock, including public or private equity financings.

IntelGenx Technologies Corp.

Notes to Consolidated Interim Financial Statements

March 31, 2023

(Expressed in U.S. Funds)
(Unaudited)

2. Going Concern (Cont'd)

Raise funding through debt financing.
Continue to seek partners to advance product pipeline.
Expand oral film manufacturing activities.
Initiate contract oral film manufacturing activities.

If the Company is unable to raise further capital when needed or on attractive terms, or if it is unable to procure partnership arrangements to advance its programs, the Company would be forced to potentially delay, reduce or eliminate some of its research and development programs and commercial activities.

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The accompanying consolidated financial statements do not include any adjustments or classifications that may result from the possible inability of the Company to continue as a going concern. Should the Company be unable to continue as a going concern, it may be unable to realize the carrying value of its assets and to meet its liabilities as they become due.

3. Significant Accounting Policies

Revenue Recognition

The Company may enter into licensing and collaboration agreements for product development, licensing, supply and manufacturing for its product pipeline. The terms of the agreements may include non-refundable signing and licensing fees, milestone payments and royalties on any product sales derived from collaborations. These contracts are analyzed to identify all performance obligations forming part of these contracts. The transaction price of the contract is then determined. The transaction price is allocated between all performance obligations on a residual standalone selling price basis. The stand-alone selling price is estimated based on the comparable market prices, expected cost plus margin and the Company's historical experience.

Revenue is measured based on a consideration specified in a contract with a customer, and excludes any sales incentives and amounts collected on behalf of third parties. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer.

Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue.

The following is a description of principal activities - separated by nature - from which the Company generates its revenue.

Product revenue

The Company recognizes revenue from the sale of its products when the following conditions are met: delivery has occurred; the price is fixed or determinable; the collectability is reasonably assured and persuasive evidence of an arrangement exists

IntelGenx Technologies Corp.

Notes to Consolidated Interim Financial Statements

March 31, 2023

(Expressed in U.S. Funds)
(Unaudited)

3. Significant Accounting Policies (Cont'd)

Research and Development Revenue

Revenues with corporate collaborators are recognized as the performance obligations are satisfied over time, and the related expenditures are incurred pursuant to the terms of the agreement.

Licensing and Collaboration Arrangements

Licenses are considered to be right-to-use licenses. As such, the Company recognizes the licenses revenues at a point in time, upon granting the licenses.

Milestone payments are considered variable consideration. As such, the Company estimates variable consideration at the most likely amount to which we expect to be entitled. The estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. At the end of each subsequent reporting period, the Company re-evaluates the probability of achievement of such development milestones and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect license, research and other revenues in the period during which the adjustment is recognized. The process of successfully achieving the criteria for the milestone payments is highly uncertain. Consequently, there is significant risk that the Company may not earn all of the milestone payments for each of its contracts.

Royalties are typically calculated as a percentage of net sales realized by the Company's licensees of its products (including their sub-licensees), as specifically defined in each agreement. The licensees' sales generally consist of revenues from product sales of the Company's product pipeline and net sales are determined by deducting the following: estimates for chargebacks, rebates, sales incentives and allowances, returns and losses and other customary deductions in each region where the Company has licensees. Revenues arising from royalties are considered variable consideration. As such, the Company estimates variable consideration at the most likely amount to which we expect to be entitled. The estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved.

Leasehold Improvements and Equipment

Leasehold improvements and equipment are recorded at cost. Provisions for depreciation are based on their estimated useful lives using the methods as follows:

On the declining balance method -

Laboratory and office equipment	20%
Computer equipment	30%

On the straight-line method -
Leasehold improvements	over the lease term

Manufacturing equipment	5 - 10 years

IntelGenx Technologies Corp.

Notes to Consolidated Interim Financial Statements

March 31, 2023

(Expressed in U.S. Funds)
(Unaudited)

3. Significant Accounting Policies (Cont'd)

Upon retirement or disposal, the cost of the asset disposed of and the related accumulated depreciation are removed from the accounts and any gain or loss is reflected in income. Expenditures for repair and maintenance are expensed as incurred.

Leases

Leases are classified as either finance leases or operating leases. A lease is classified as a finance lease if any one of the following criteria are met: the lease transfers ownership of the asset by the end of the lease term, the lease contains an option to purchase the asset that is reasonably certain to be exercised, the lease term is for a major part of the remaining useful life of the asset or the present value of the lease payments equals or exceeds substantially all of the fair value of the asset. A lease is classified as an operating lease if it does not meet any one of these criteria.

Substantially all of the Company's operating leases are comprised of office space and property leases. The finance leases are comprised of laboratory equipment leases.

For all leases at the lease commencement date, a right-of-use asset and a lease liability are recognized. The right-of-use asset represents the right to use the leased asset for the lease term. The lease liability represents the present value of the lease payments under the lease.

The right-of-use asset is initially measured at cost, which primarily comprises the initial amount of the lease liability, plus any initial costs incurred, consisting mainly of brokerage commissions, less any lease incentives received. All right-of-use assets are reviewed for impairment. The lease liability is initially measured as the present value of the lease payments, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company's secured incremental borrowing rate for the same term as the underlying lease.

Lease payments included in the measurement of the lease liability comprise the following: the fixed noncancelable lease payments, payments for optional renewal periods where it is reasonably certain the renewal period will be exercised, and payments for early termination options unless it is reasonably certain the lease will not be terminated early.

Lease modifications result in remeasurement of the lease liability.

Lease expense for operating leases consists of the lease payments plus any initial direct costs, primarily brokerage commissions, and is recognized on a straight-line basis over the lease term. Included in lease expense are any variable lease payments incurred in the period that were not included in the initial lease liability.

The Company has elected not to recognize right-of-use assets and lease liabilities for short-tern leases that have a term of 12 months or less. The effect of short-term leases on our right-of-use asset and lease liability was not material.

IntelGenx Technologies Corp.

Notes to Consolidated Interim Financial Statements

March 31, 2023

(Expressed in U.S. Funds)
(Unaudited)

4. Inventory

Inventory as at March 31, 2023 consisted of raw materials in the amount of $70 thousand (2022: $62 thousand).

5. Leasehold Improvements and Equipment

						March 31, 2023		December 31, 2022
				Accumulated		Net Carrying		Net Carrying
		Cost		Depreciation		Amount		Amount
Manufacturing equipment	$	4,600	$	1,769	$	2,831	$	2,894
Laboratory and office equipment		1,570		1,138		432		419
Computer equipment		152		123		29		34
Leasehold improvements		3,302		2,276		1,026		1,078
	$	9,624	$	5,306	$	4,318	$	4,425

As at March 31, 2023, no depreciation has been recorded on manufacturing equipment in the amount of $1,716 thousand (2022 - $1,715 thousand) as this equipment is not yet in use.

6. Bank Indebtedness

The Company's credit facility is subject to review annually and consists of corporate credits cards of up to CAD$75 thousand ($55 thousand) and $60 thousand, and foreign exchange contracts limited to CAD$425 thousand ($314 thousand).

7. Loan Payable

atai Life Sciences ("atai") has granted to the Company a secured loan in the amount of $8,500,000, bearing interest at 8%. The loan is guaranteed by the Company and secured by all present and future movable property, rights and assets of the Company, excluding any intellectual property or technology controlled or owned by the Company. The loan will mature on January 5, 2024. The interest for the three-month period ended March 31, 2023 amounts to $164,000 and is recorded in financing and interest expense (2022 - $91,000).

IntelGenx Technologies Corp.

Notes to Consolidated Interim Financial Statements

March 31, 2023

(Expressed in U.S. Funds)
(Unaudited)

7. Loan Payable (Cont'd)

The components of the Company's debt are as follows:

	March 31, 2023 $	December 31, 2022 $

Loan payable to atai	8,500	5,500
Total debt	8,500	5,500

Less: current portion	8,500	-

Total long-term debt	-	5,500

8. Convertible Notes

On March 21, 2023, the Company announced the closing of an offering by way of private placement to certain investors in the United States of $763 thousand principal amount of 10% convertible notes due March 1, 2027. The Notes will bear interest at a rate of 10% per annum, payable quarterly, and will be convertible into shares of common stock of the Company beginning 6 months after their issuance at a price of $0.20 per Share. The Company intends to use the proceeds of the Offering to finance the Company's Rizaport and Buprenorphine programs as well as for working capital. In connection with the Offering, the Company paid to an agent a cash commission of approximately $53,000 in the aggregate and issued non-transferable warrants to the agent, entitling the holder to purchase 304,000 common shares at a price of $0.20 per Share until March 21, 2025.

Management has determined the value of the agents' warrants to be $19,000.

The convertible notes have been recorded as a liability. Total transactions costs in the amount of $126 thousand were recorded against the liability. The accretion expense for the three-month period ended March 31, 2023 amounts to $1,000 (2022: $Nil). The warrants have been recorded as equity.

The components of the convertible notes are as follows:

		March 31, 2023

Face value of the convertible notes	$	763
Transaction costs		(126	)
Accretion		1
Convertible notes	$	638

The interest on the convertible notes for the three-month period ended March 31, 2023 amounts to $2,000 (2022: $Nil) and is recorded in financing and interest expense.

IntelGenx Technologies Corp.

Notes to Consolidated Interim Financial Statements

March 31, 2023

(Expressed in U.S. Funds)
(Unaudited)

8. Convertible Notes (Cont'd)

On August 5, 2021, the Company announced the closing of an offering by way of private placement to certain investors in the United States of $2.1 million principal amount of 8% convertible notes due July 31, 2025. The Notes will bear interest at a rate of 8% per annum, payable quarterly, and will be convertible into shares of common stock of the Company beginning 6 months after their issuance at a price of $0.40 per Share. The Company intends to use the proceeds of the Offering for the Montelukast clinical program. In connection with the Offering, the Company paid to an agent a cash commission of approximately $199,525 in the aggregate and issued non-transferable warrants to the agent, entitling the holder to purchase 613,000 common shares at a price of $0.40 per Share until August 4, 2023.

Management has determined the value of the agents' warrants to be $164,000.

The convertible notes have been recorded as a liability. Total transactions costs in the amount of $403 thousand were recorded against the liability. The accretion expense for the three-month period ended March 31, 2023 amounts to $23,000 (2022: $21,000). The warrants have been recorded as equity.

The components of the convertible notes are as follows:

		March 31, 2023			December 31, 2022

Face value of the convertible notes	$	2,101		$	2,101
Transaction costs		(403	)		(403	)
Accretion		142			119
Convertible notes	$	1,840		$	1,817

The interest on the convertible notes for the three-month period ended March 31, 2023 amounts to $42,000 (2022: $42,000) and is recorded in financing and interest expense.

On May 8, 2018, the Company closed its previously announced offering by way of private placement (the "Offering"). In connection with the Offering, the Company issued 320 units (the "Units") at a subscription price of $10,000 per Unit for gross proceeds of $3,200,000. A related party of the Company participated in the Offering and subscribed for an aggregate of two Units.

Each Unit is comprised of (i) 7,940 common shares of the Corporation ("Common Shares"), (ii) a $5,000 convertible 6% note (a "Note"), and (iii) 7,690 warrants to purchase common shares of the Corporation ("Warrants"). Each Note bears interest at a rate of 6% (payable quarterly, in arrears, with the first payment being due on September 1, 2018), matured on June 1, 2021 and is convertible into Common Shares at a conversion price of $0.80 per Common Share. Each Warrant entitled its holder to purchase one Common Share at a price of $0.80 per Common Share until June 1, 2021.

In connection with the Offering, the Company paid to the Agents a cash commission of approximately $157,800 in the aggregate and issued non-transferable agents' warrants to the Agents, entitling the Agents to purchase 243,275 common shares at a price of $0.80 per share until June 1, 2021. Management has determined the value of the agents' warrants to be $50,000.

IntelGenx Technologies Corp.

Notes to Consolidated Interim Financial Statements

March 31, 2023

(Expressed in U.S. Funds)
(Unaudited)

8. Convertible Notes (Cont'd)

The proceeds of the Units are attributed to liability and equity components based on the fair value of each component as follows:

		Gross proceeds		Transaction costs		Net proceeds

Common stock	$	1,627	$	167	$	1,460
Convertible notes		1,086		111		975
Warrants		487		50		437
	$	3,200	$	328	$	2,872

On May 19, 2021, the noteholders approved the amendment of the terms of the convertible notes. The maturity date of the convertible notes was extended from June 1, 2021 to October 31, 2024, the interest rate of the notes increased from 6% to 8%, and the conversion price was reduced from $0.80 to $0.44. These amendments were accounted for as an extinguishment and the notes were re-measured at fair value on June 1, 2021. This re-measurement resulted in a gain on extinguishment in the amount of $151,000 recognized in finance and interest income.

The components of the convertible notes subsequent to the amendments are as follows:

		March 31, 2023			December 31, 2022

Face value of the convertible notes	$	909		$	909
Transaction costs		(29	)		(29	)
Accretion		60			52
Convertible notes	$	940		$	932

The convertible notes have been recorded as a liability. Total transactions costs in the amount of $29 thousand were recorded against the liability. The accretion expense for the three-month period ended March 31, 2023 amounts to $8,000 (2022: $7,000).

The interest on the convertible notes for the three-month period ended March 31, 2023 amounts to $20,000 and is recorded in financing and interest expense (2022: $20,000).

On October 15, 2020, the Company announced the closing of an offering by way of private placement to certain investors in the United States of $1.2 million principal amount of 8% convertible notes due October 15, 2024. The Notes will bear interest at a rate of 8% per annum, payable quarterly, and will be convertible into shares of common stock of the Company beginning 6 months after their issuance at a price of $0.18 per Share. The Company intends to use the proceeds of the Offering for working capital purposes. In connection with the Offering, the Company paid to an agent a cash commission of approximately $85,000 in the aggregate and issued non-transferable warrants to the agent, entitling the holder to purchase 482,000 common shares at a price of $0.18 per Share until October 15, 2022.

IntelGenx Technologies Corp.

Notes to Consolidated Interim Financial Statements

March 31, 2023

(Expressed in U.S. Funds)
(Unaudited)

8. Convertible Notes (Cont'd)

On October 23, 2020, the Company announced the closing of a second tranche of the Notes to certain investors in the United States of $557 thousand principal amount of 8% convertible notes due October 15, 2024. The Notes bear interest at a rate of 8% per annum, payable quarterly, and are convertible into shares of common stock of the Company beginning 6 months after their issuance at a price of $0.18 per Share. In connection with the Offering, the Company paid to an agent a cash commission of approximately $39,000 in the aggregate and issued non-transferable warrants to the agent, entitling the holder to purchase 222,800 common shares at a price of $0.18 per Share until October 15, 2022.

Management has determined the value of the agents' warrants to be $44,000.

The convertible notes have been recorded as a liability. Total transactions costs in the amount of $268 thousand were recorded against the liability. The accretion expense for the three-month period ended March 31, 2023 amounts to $16,000 (2022: $14,000). The warrants have been recorded as equity.

The components of the convertible notes are as follows:

		March 31, 2023		December 31, 2022

Attributed value of net proceeds to convertible notes	$	1,397	$	1,397
Accretion		142		126
Convertible note		1,539	$	1,523

The interest on the convertible notes for the three-month period ended March 31, 2023 amounts to $33,000 (2022: $33,000) and is recorded in financing and interest expense.

9. Capital Stock

		March 31, 2023		December 31, 2022

Authorized -

450,000,000 common shares of $0.00001 par value
20,000,000 preferred shares of $0.00001 par value

Issued -

174,646,196 (December 31, 2022 - 174,646,196) common shares	$	1	$	1

IntelGenx Technologies Corp.

Notes to Consolidated Interim Financial Statements

March 31, 2023

(Expressed in U.S. Funds)
(Unaudited)

10. Additional Paid-In Capital

Stock options

On January 29, 2023, 310,000 options to purchase common stock were granted to employees under the 2016 Stock Option Plan. The options have an exercise price of $0.24. The options granted vest over a period of 4 years at a rate of 25% every twelve months and expire 10 years after the grant date. These options may have accelerated vesting if specific market conditions are met. The market conditions are based on the Company's stock price achieving specified targets over a continuous period of 30 calendar days. If the market conditions are met, the options will immediately vest and become exercisable. The stock options were accounted for at their fair value, as determined by the Black-Scholes valuation model, of approximately $55 thousand.

On January 20, 2022, 25,000 options to purchase common stock were granted to an employee under the 2016 Stock Option Plan. The options have an exercise price of $0.34. The options granted vest over a period of 2 years at a rate of 25% every six months and expire 10 years after the grant date. The stock options were accounted for at their fair value, as determined by the Black-Scholes valuation model, of approximately $6 thousand.

No stock options were exercised during the three-month periods ended March 31, 2023 and 2022.

Compensation expenses for stock-based compensation of $11 thousand and $32 thousand were recorded during the three-month periods ended March 31, 2023 and 2022, respectively. An amount of $8 thousand (2022 - $29 thousand) expensed in the three-month period ended March 31, 2023 relates to stock options granted to employees and an amount of $3 thousand (2022 - $3 thousand) relates to stock options granted to a consultant. As at March 31, 2023, the Company has $83 thousand of unrecognized stock-based compensation.

Warrants

No warrants were exercised during the three-month periods ended March 31, 2023 and 2022.

Deferred Share Units ("DSUs")

On January 29, 2023, 781,250 DSUs have been granted under the DSU Plan, accordingly, an amount of $185 thousand has been recognized in general and administrative expenses.

On January 1, 2022, 543,480 DSUs have been granted under the DSU Plan, accordingly, an amount of $197 thousand has been recognized in general and administrative expenses.

Performance and Restricted Share Units ("PRSUs")

On January 29, 2023, the Company granted 350,000 Performance Restricted Share Units to certain employees, which vest if certain market conditions are met. The PRSUs vest based on the achievement of specified market conditions over a performance period of 3 years. The market conditions are based on the Company's stock price achieving specified targets over a continuous period of 30 calendar days. If the market conditions are met, the PRSUs will vest and become payable in shares of the Company's common stock.

The Company will monitor the achievement of the market conditions throughout the performance period and will recognize compensation expense for any PRSUs that are expected to vest based on the probability of the achievement of the market conditions. As at March 31, 2023, no expense has been recognized.

No PRSUs were granted during the three-month period ended March 31, 2022.

IntelGenx Technologies Corp.

Notes to Consolidated Interim Financial Statements

March 31, 2023

(Expressed in U.S. Funds)
(Unaudited)

11. Revenues

The following table presents our revenues disaggregated by revenue source. Sales and usage-based taxes are excluded from revenues:

		March 31, 2023		March 31, 2022

Research and development agreements	$	162	$	225
Royalties on product sales		-		12
	$	162	$	237

The following table presents our revenues disaggregated by timing of recognition:

		March 31, 2023		March 31, 2022
(in U.S. $thousands)
Product and services transferred at point in time	$	-	$	12
Products and services transferred over time		162		225
	$	162	$	237

The following table presents our revenues disaggregated by geography, based on the billing addresses of our customers:

		March 31, 2023		March 31, 2022

Europe	$	162	$	237
	$	162	$	237

Remaining performance obligations

As at March 31, 2023, the aggregate amount of the transaction price allocated to the remaining performance obligation is $1,547 representing research and development agreements. The Company is also eligible to receive up to $2,553 in research and development milestone payments, approximately 100% of which is expected to be recognized in the next three years; up to $433 in commercial sales milestone payments which are wholly dependent on the marketing efforts of our development partners. In addition, the Company is entitled to receive royalties on potential sales.

The Company applies the practical expedient in paragraph 606-10-50-14 and does not disclose information about the remaining performance obligations that have original expected durations of one year or less.

IntelGenx Technologies Corp.

Notes to Consolidated Interim Financial Statements

March 31, 2023

(Expressed in U.S. Funds)
(Unaudited)

12. Leases

Operating leases

Substantially all our operating lease right-of-use assets and operating lease liability represents leases for office space and property to conduct our business.

The operating lease expense for the three-month period ended March 31, 2023 included in general and administrative expenses is $65 thousand. The cash outflows from operating leases for the three-month period ended March 31, 2023 was $64 thousand.

The weighted average remaining lease term and the weighted average discount rate for operating leases at March 31, 2023 were 2.9 years and 10%, respectively.

The following table reconciles the undiscounted cash flows for the operating leases as at March 31, 2023 to the operating lease liabilities recorded on the balance sheet:

		Operating Leases
2023		195
2024		267
2025		267
2026		44
Total undiscounted lease payments		773
Less: Interest		160
Present value of lease liabilities		$613

Current portion of operating lease liability	$	238
Operating lease liability	$	375

Finance leases

Substantially all our finance lease right-of-use assets and finance lease liability represents leases for laboratory equipment to conduct our business.

The cash outflows from finance leases for the three-month period ended March 31, 2023 was $9 thousand.

The weighted average remaining lease term and the weighted average discount rate for finance leases at March 31, 2023 were 1.8 years and 6.35%, respectively.

IntelGenx Technologies Corp.

Notes to Consolidated Interim Financial Statements

March 31, 2023

(Expressed in U.S. Funds)
(Unaudited)

12. Leases (Cont'd)

The following table reconciles the undiscounted cash flows for the finance leases as at March 31, 2023 to the finance lease liabilities recorded on the balance sheet:

		Finance Leases

2023		30
2024		38
2025		6
Total undiscounted lease payments		74
Less: Interest		4
Present value of lease liabilities		$70

Current portion of finance lease liability	$	37
Finance lease liability	$	33

13. Related Party Transactions

Included in management salaries are $2 thousand (2022 - $16 thousand) for options granted to key management personnel under the 2016 Stock Option Plan. The Company considers its Chief Executive Officer, President and Chief Financial Officer, and Vice-Presidents to be key management personnel.

Also included in general and administrative expense for the three-month period ended March 31, 2023 are director fees of $57 thousand (2022 - $58 thousand) and DSU expense of $144 thousand (2022: $68 thousand).

The above related party transactions have been measured at the exchange amount which is the amount of the consideration established and agreed to by the related parties.

14. Basic and Diluted Loss Per Common Share

Basic and diluted loss per common share is calculated based on the weighted average number of shares outstanding during the period. The warrants, share-based compensation and convertible debenture and notes have been excluded from the calculation of diluted loss per share since they are anti-dilutive.

15. Contingencies

The government authorities have assessed the Company with respect to sales taxes claimed on certain expenses between 2017 and 2020, which the government is denying. The sales tax assessments amount to $315,000 (including interest and penalties of $34,000), which was paid to avoid further interest and penalties. The Company disagrees with the government's position and the sales tax assessments are under appeal. In the event the Company is unsuccessful in its appeal, sales taxes expenses would increase by $281,000 and net earnings would decrease by $281,000.

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

Introduction to Management's Discussion and Analysis

This Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") comments on our business operations, performance, financial position and other matters for the three-month periods ended March 31, 2023 and 2022.

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 MD&A should be read in conjunction with the accompanying unaudited Consolidated Financial Statements and Notes thereto. We also encourage you to refer to the Company's MD&A for the year ended December 31, 2022. In preparing this MD&A, we have taken into account information available to us up to May 11, 2023, the date of this MD&A, unless otherwise indicated.

Additional information relating to the Company, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (the "2022 Form 10-K"), is available on SEDAR at www.sedar.com and on the U.S. Securities and Exchange Commission (the "SEC") website at www.sec.gov.

All dollar amounts are expressed in U.S. dollars, unless otherwise noted.

Cautionary Statement Concerning Forward-Looking Statements

Certain statements included or incorporated by reference in this MD&A constitute forward-looking statements within the meaning of applicable securities laws. All statements contained in this MD&A that are not clearly historical in nature are forward-looking, and the words "anticipate", "believe", "continue", "expect", "estimate", "intend", "may", "plan", "will", "shall" and other similar expressions are generally intended to identify forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All forward-looking statements are based on our beliefs and assumptions based on information available at the time the assumption was made. These forward-looking statements are not based on historical facts but on management's expectations regarding future growth, results of operations, performance, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, business prospects and opportunities. Forward-looking statements involve significant known and unknown risks, uncertainties, assumptions and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from those implied by forward-looking statements. These factors should be considered carefully and you should not place undue reliance on the forward-looking statements. Although the forward-looking statements contained in this MD&A or incorporated by reference herein are based upon what management believes to be reasonable assumptions, there is no assurance that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this MD&A or as of the date specified in the documents incorporated by reference herein, as the case may be. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which such statements were made or to reflect the occurrence of unanticipated events, except as may be required by applicable securities laws. The factors set forth in Item 1A., "Risk Factors" of the 2022 Form 10-K, as well as any cautionary language in this MD&A, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. Before you invest in the common stock, you should be aware that the occurrence of the events described as risk factors and elsewhere in this report could have a material adverse effect on our business, operating results and financial condition.

Company Background

We are a drug delivery company established in 2003 and headquartered in Montreal, Quebec, Canada. Our focus is on the contract development and manufacturing of novel oral thin film products for the pharmaceutical market. More recently, we have made the strategic decision to enter the Canadian cannabis market with a non-prescription cannabis infused oral film that launched in early 2021 and in 2020 we made the decision to enter the psychedelic market. As a full-service contract development and manufacturing organization ("CDMO"), we are offering partners a comprehensive portfolio of pharmaceutical services, including pharmaceutical research and development ("R&D"), clinical monitoring, regulatory support, tech transfer, manufacturing scale-up and commercial manufacturing.

Our business strategy is to leverage our proprietary drug delivery technologies and develop pharmaceutical products with tangible benefits for patients, for our partners and, once a developed product launches, retain the exclusive manufacturing rights.

Managing our project pipeline is a key Company success factor. We have identified three focus areas; psychedelics, cannabis and animal health where we believe we can establish a leadership position with our drug delivery technology. We have undertaken a strategy under which we will work with pharmaceutical companies in order to apply our oral film technology to pharmaceutical products for which patent protection is nearing expiration, a strategy which is often referred to as "lifecycle management." Under Section 505(b)(2) of the Federal Food, Drug, and Cosmetics Act (the "FDCA") ("Section 505(b)(2)"), the U.S. Food and Drug Administration (the "FDA") may grant market exclusivity for a term of up to three years 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 a combination.

The Section 505(b)(2) pathway is also the regulatory approach to be followed if an applicant intends to file an application for a product containing a drug that is already approved by the FDA for a certain indication and for which the applicant is seeking approval for a new indication or for a new use, the approval of which is required to be supported by new clinical trials, other than bioavailability studies. We have implemented a strategy under which we actively look for such so-called "repurposing opportunities" and determine whether our proprietary VersaFilm™ technology adds value to the product. We currently have two such drug repurposing projects in our development pipeline.

We continue to develop the existing products in our pipeline and may also perform R&D on other potential products as opportunities arise.

We have established a state-of-the-art manufacturing facility with the intent to manufacture all of our VersaFilm™ products in-house as we believe that this:

represents a profitable business opportunity;
will reduce our dependency upon third-party contract manufacturers, thereby protecting our manufacturing process know-how and intellectual property; and
allows us to offer our clients and development partners a full service from product conception through to supply of the finished product.

We initiated a project to expand the existing manufacturing facility, the timing of which will be dictated in part by the completion of agreements with our commercial partners. This expansion might become necessary in order to meet expected production volumes from our commercial partners. The new facility should create a fourfold increase of our production capacity in addition to offering a one-stop shopping opportunity to our partners and provide better protection of our Intellectual Property.

Technology Platforms

Our main product development efforts are based upon three delivery platform technologies: (1) VersaFilm™, an oral film technology, (2) the VetaFilm^TM technology platform for veterinary applications, and (3) DisinteQ^TM a disintegrating oral film technology.

VersaFilm™ is a drug delivery platform technology that enables the development of oral thin films, improving product performance through:

rapid disintegration without the need for water;
quicker buccal or sublingual absorption;
potential for faster onset of action and increased bioavailability;
potential for reduced adverse effects by bypassing first-pass metabolism;
easy administration for patients who have problems swallowing tablets or capsules; pediatric and geriatric patients as well as patients who fear choking and/or are suffering from nausea (e.g., nausea resulting from chemotherapy, radiotherapy or any surgical treatment);
pleasant taste; and
small and thin size, making it convenient for consumers.

Our VersaFilm™ technology consists of a thin (25-35 micron) polymeric film comprised of United States Pharmacopeia components that are approved by the FDA for use in food, pharmaceutical, and cosmetic products. Derived from the edible film technology used for breath strips and initially developed for the instant delivery of savory flavors to food substrates, the VersaFilm™ technology is designed to provide a rapid response and improved bioavailability compared to existing conventional tablets. Our VersaFilm™ technology is intended for indications requiring rapid onset of action, such as migraine, opioid dependence, chronic pain, motion sickness, erectile dysfunction, and nausea or for drug that have a low oral bioavailability and require transmucosal absorption.

Our VetaFilm™ platform technology is designed for the application in companion animals. Dose acceptance and compliance are often a challenge for the care giver which can be overcome with our newly designed VetaFilm™ platform. VetaFilm™ is specifically formulated with flavors that are appealing to pets and to achieve rapid adhesion to the oral mucosa of the animal to achieve compliance.

Our new DISINTEQ™ oral disintegrating film formulations will provide different dissolution characteristics compared to VersaFilm®. Instead of quickly dissolving in the oral cavity, DISINTEQ™ formulations disintegrate at a controlled rate. This will allow a slower release of the drug into the oral cavity thereby avoiding saturation of the oral mucosal membranes and increasing mucosal absorption.

Product Opportunities that provide Tangible Patient Benefits

In addition to our three key strategic areas, we will offer our services to develop oral film products leveraging our VersaFilm™ technology that provide tangible patient benefits versus existing drug delivery forms. Patients with difficulties swallowing medication, pediatrics or geriatrics may benefit from oral films due to the ease of use. Similarly, we are working on oral films to improve bio-availability and/or response time versus existing drugs and thereby reducing side effects.

Development of New Drug Delivery Technologies

The rapidly disintegrating film technology contained in our VersaFilm™, is an example of our efforts to develop alternate technology platforms. As we work with various partners on different products, we seek opportunities to develop new proprietary technologies.

Most recent key developments

On January 9, 2023, the Company announced that its wholly-owned subsidiary, IntelGenx Corp. received a fourth and final term loan in the amount of U.S. $3 million pursuant to its amended and restated secured loan agreement with atai Life Sciences. The obligations under the Fourth Loan are guaranteed by the Company.

On January 23, 2023, the Company announced that it entered into an exclusive supply agreement for RIZAPORT® with ARWAN Pharmaceuticals Industries Lebanon s.a.l. in various countries in the Middle East and North Africa ("MENA") region, including Lebanon, Kuwait, Saudi Arabia, United Arab Emirates, Jordan, Iraq, Libya, Oman, Yemen, Qatar, Bahrain, Egypt, Sudan, Kenya, Nigeria, Mauritius, Cameroon, Afghanistan, Tajikistan, Kazakhstan, Turkmenistan, and Uzbekistan . Under the terms of the ARWAN Agreement, IntelGenx will supply RIZAPORT® to ARWAN, which will have the exclusive right to register and commercialize it in the Territory.

On February 9, 2023, IntelGenx announced a research collaboration with Per Svenningsson, MD, PhD, of the Karolinska Institute, Stockholm, Sweden, to plan and conduct a multicentre, randomized, double-blind, placebo-controlled clinical study to investigate the use of IntelGenx's Montelukast VersaFilm^® for the treatment of Parkinson's Disease (PD). Dr. Svenningsson will serve as the Principal Investigator for the planned Study and will sponsor it through a 20 million Swedish Crowns grant (approx. $2 million USD) awarded by the Swedish Research Council, Sweden's largest governmental research funding body. IntelGenx will supply Dr. Svenningsson with both active and placebo films to be used in the 18-month treatment regimen for study participants. Upon completion of the Study, IntelGenx will retain the intellectual property rights and use the findings to further develop its Montelukast VersaFilm^® program for PD treatment. The Study is currently expected to commence in the third quarter of 2023.

On February 21, 2023, IntelGenx announced that the United States Patent and Trademark Office ("USPTO") granted a Notice of Allowance for U.S. Patent Application 16/053,383, entitled "Loxapine Film Oral Dosage Form." This film formulation patent covers Loxapine oral film formulations designed for use in patients with anxiety and agitation associated with schizophrenia and bipolar 1 disorder, and is intended to protect IntelGenx Loxapine VersaFilm^® product.

On March 9, 2023, the Company participated to the 35^th Annual Roth Conference, held March 12-14, 2023 at the Ritz-Carlton Hotel in Dana Point, California.

On March 21, 2023, the Company announced the closing of an offering by way of a private placement to certain investors in the United States of convertible notes due March 1, 2027 for aggregate gross proceeds of $763,000. The Notes bear interest at a rate of 10% per annum, payable quarterly, and will be convertible into shares of common stock of the Company beginning six months after their issuance at a price of $0.20 per share. The Company intends to use the proceeds of the Offering to finance the Company's Rizaport and Buprenorphine programs as well as for working capital. In connection with the Offering, the Company paid a cash commission of approximately $53,000 in the aggregate and issued non-transferable agent warrants, entitling the agent to purchase 304,000 shares at a price of $0.20 per share until March 21, 2025.

Subsequent to the end of the period, on April 13, 2023, the Company announced various changes to its management team. Dwight Gorham was appointed as Chief Executive Officer. He succeeds Dr. Zerbe, who retired from his position as CEO, but continues to serve as Chairman of IntelGenx's Board of Directors.

Subsequent to the end of the period, on April 17, 2023, the Company announced that the U.S Food and Drug Administration ("FDA") approved the Company's RIZAFILM® Versafilm® 505(b)(2) new drug application (NDA) for the treatment of acute migraine (RIZAFILM® is a Registered Trademark of Gensco® Pharma Corporation).

Subsequent to the end of the period, on April 27, 2023, the Company announced that its co-developer, Chemo Research SL, through its agent and affiliate, Xiromed LLC, received a Complete Response Letter ("CRL") from the U.S. Food and Drug Administration ("FDA") regarding the submitted abbreviated new drug application ("ANDA") for Buprenorphine Buccal Film. Xiromed and IntelGenx will contact FDA to discuss the CRL and assess the filing of a request for reconsideration of the CRL.

Subsequent to the end of the period, on April 27, 2023, the Company announced that it received conditional approval from the Toronto Stock Exchange to extend the expiry date of warrants originally issued to Cantone Research Inc. on August 5, 2021 . The 613,000 Broker Warrants are exercisable for shares of common stock of the Company at a price of US$0.40 per Share and are set to expire on August 4, 2023. Effective May 8, 2023, the expiry date of such Broker Warrants was extended by an additional 12 months to August 4, 2024. All other terms of the Broker Warrants, including the exercise price, remain unchanged. The Company and Cantone Research Inc. are dealing at arm's length.

All amounts are expressed in thousands of U.S. dollars unless otherwise stated.

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. In summary, our financial statements for the three-month period ended March 31, 2023 report an accumulated other comprehensive loss mainly due to foreign currency translation adjustments of $2,230 primarily due to the fluctuations in the rates used to prepare our financial statements, currency fluctuation did not impact our comprehensive loss for the three-month period ended March 31, 2023. The following Management Discussion and Analysis takes this into consideration whenever material.

Reconciliation of Comprehensive Loss to Adjusted Earnings (Loss) before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA (Loss))

Adjusted EBITDA is a non-US GAAP financial measure. A reconciliation of the Adjusted EBITDA is presented in the table below. The Company uses adjusted financial measures to assess its operating performance. Securities regulations require that companies caution readers that earnings and other measures adjusted to a basis other than US-GAAP do not have standardized meanings and are unlikely to be comparable to similar measures used by other companies. Accordingly, they should not be considered in isolation. The Company uses Adjusted EBITDA to measure its performance from one period to the next without the variation caused by certain adjustments that could potentially distort the analysis of trends in our operating performance, and because the Company believes it provides meaningful information on the Company's financial condition and operating results.

IntelGenx obtains its Adjusted EBITDA measurement by adding / (deducting) to comprehensive loss, finance income and costs, depreciation and amortization, income taxes and foreign currency translation adjustment incurred during the period. IntelGenx also excludes the effects of certain non-monetary transactions recorded, such as share-based compensation, for its Adjusted EBITDA calculation. The Company believes it is useful to exclude these items as they are either non-cash expenses, items that cannot be influenced by management in the short term, or items that do not impact core operating performance. Excluding these items does not imply they are necessarily nonrecurring. Share-based compensation costs are a component of employee and consultant's remuneration and can vary significantly with changes in the market price of the Company's shares. Foreign currency translation adjustments are a component of other comprehensive income and can vary significantly with currency fluctuations from one period to another. In addition, other items that do not impact core operating performance of the Company may vary significantly from one period to another. As such, Adjusted EBITDA provides improved continuity with respect to the comparison of the Company's operating results over a period of time. Our method for calculating Adjusted EBITDA may differ from that used by other corporations.

Reconciliation of Non-US-GAAP Financial Information

	Three-month period ended March 31,
	2023		2022
	$		$
Comprehensive loss	(2,920	)	(3,018	)
Add (deduct):
Depreciation	192		195
Finance costs	319		377
Finance income	(14	)	(1	)
Share-based compensation	11		32
Other comprehensive (income) loss	(4	)	332

Adjusted EBITDA (Loss)	(2,416	)	(2,083	)

Adjusted Earnings (Loss) before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA Loss)

Adjusted EBITDA (Loss) increased by $333 for the three-month period ended March 31, 2023 to ($2,416) compared to ($2,083) for the three-month period ended March 31, 2022. The increase in Adjusted EBITDA (Loss) of $333 for the three-month period ended March 31, 2023 is mainly attributable to an increase in R&D expenses of $27 before consideration of stock-based compensation, an increase in SG&A expenses of $223 before consideration of stock-based compensation, an increase in manufacturing expenses of $8 before consideration of stock-based compensation, and a decrease in revenues of $75.

Results of operations for the three-month period ended March 31, 2023 compared with the three-month period ended March 31, 2022.

	Three-month period ended March 31,
	2023		2022
	$		$
Revenue	162		237

Research and development Expenses	822		798
Manufacturing Expenses	472		470
Selling, General and Administrative Expenses	1,295		1,084
Depreciation of tangible assets	192		195

Operating loss	(2,619	)	(2,310	)
Net loss	(2,924	)	(2,686	)
Comprehensive loss	(2,920	)	(3,018	)

Revenue

Total revenues for the three-month period ended March 31, 2023 amounted to $162, representing a decrease of $75 or 32% compared to $237 for the three-month period ended March 31, 2022. The decrease for the three-month period ended March 31, 2023 compared to the last year's corresponding period is attributable to decreases in R&D revenues of $63 and Royalties on Product Sales of $12.

Research and development ("R&D") expenses

R&D expenses for the three-month period ended March 31, 2023 amounted to $822, representing an increase of $24 or 3%, compared to $798 for the three-month period ended March 31, 2022.

The increase in R&D expenses for the three-month period ended March 31, 2023 is mainly attributable to increases in patent expenses of $26, lab supplies of $24, the allocation of the 20% credit of $15 as per the strategic development agreement with atai, consulting fees of $6 and a decrease in R&D estimated tax credits of $2, offset by decreases in study costs of $38, repairs and maintenance of $8 and R&D development costs of $5.

In the three-month period ended March 31, 2023 we recorded estimated Research and Development Tax Credits of $37, compared with $39 that was recorded in the same period of the previous year.

Manufacturing expenses

Manufacturing expenses for the three-month period ended March 31, 2023 amounted to $472, representing an increase of $2 or 0.4%, compared to $470 for the three-month period ended March 31, 2022.

The increase in Manufacturing expenses for the three-month period ended March 31, 2023 is mainly attributable to increases in supplies and consumables of $54 and storage fees of $39, offset by decreases in salary expenses of $49 due to employee departures, repairs and maintenance of $33 and quality expenses of $8.

Selling, general and administrative ("SG&A") expenses

SG&A expenses for the three-month period ended March 31, 2023 amounted to $1,295, representing an increase of $211 or 19%, compared to $1,084 for the three-month period ended March 31, 2022.

The increase in SG&A expenses for the three-month period ended March 31, 2023 is mainly attributable to increases in salaries and compensation expenses of $206 (mainly due to the issuance of new DSUs in the quarter and the hiring of new employees), insurance expense of $41, the variation of the foreign exchange due to the depreciation of the CA dollar vs US currency in the amount of $31, investor relations expenses of $27, offset by decreases in professional fees of $73, business development expenses of $11 and leasehold expenses of $11.

Depreciation of tangible assets

In the three-month period ended March 31, 2023 we recorded an expense of $192 for the depreciation of tangible assets, compared with an expense of $195 for the same period of the previous year.

Share-based compensation expense, warrants and stock-based payments

Share-based payments expense for the three-month period ended March 31, 2023 amounted to $11 compared to $32 for the three-month period ended March 31, 2022.

We expensed approximately $8 in the three-month period ended March 31, 2023 for options granted to our employees in 2021, 2022 and 2023 under the 2016 Stock Option Plan and $3 for options granted to a consultant in 2021, compared with $29 and $3, respectively that was expensed in the same period of the previous year.

There remains approximately $83 in stock-based compensation to be expensed in fiscal 2023 through 2027 of which $8 relates to the issuance of options to a consultant during 2021. We anticipate the issuance of additional options and warrants in the future, which will continue to result in stock-based compensation expense

Key items from the balance sheet

		March 31, 2023		December 31, 2022		Increase/ (Decrease)		Percentage Increase/ (Decrease)
Current assets	$	5,102	$	3,788	$	1,314		35%

Leasehold improvements and equipment, net		4,318		4,425		(107	)	(2%)

Security deposits		245		245		-		0%

Operating lease right-of-use asset		676		732		(56	)	(8%)

Current liabilities		11,289		2,374		8,915		376%

Long-term debt		-		5,500		(5,500	)	(100%)

Convertible notes		4,957		4,272		685		16%

Operating lease liability		375		425		(50	)	(12%)

Finance lease liability		33		42		(9	)	(21%)

Capital Stock		1		1		0		0%

Additional paid-in-capital		67,370		67,340		30		0.04%

Going concern

Raise funding through the possible sale of the Company's common stock, including public or private equity financings.
Raise funding through debt financing.
Continue to seek partners to advance product pipeline.
Expand oral film manufacturing activities.
Initiate contract oral film manufacturing activities.

Current assets

Current assets totaled $5,102 as at March 31, 2023 compared with $3,788 as at December 31, 2022. The increase of $1,314 is mainly attributable to increases in cash of $1,310, prepaid expenses of $75, investment tax credits receivable of $37, inventory of $8 and short-term investments of $3, offset by a decrease in accounts receivable of $119.

Cash

Cash totaled $2,520 as at March 31, 2023 representing an increase of $1,310 compared with the balance of $1,210 as at December 31, 2022. The increase in cash on hand relates to net cash provided by financing activities of $3,648, offset by net cash used in operating activities of $2,262, net cash used in investing activities of $74, and a negative foreign exchange effect of $2.

Accounts receivable

Accounts receivable totaled $590 as at March 31, 2023 representing a decrease of $119 compared with the balance of $709 as at December 31, 2022. The main reason for the decrease is the collection in the three-month period ended March 31, 2023 of revenues accounted for as at December 31, 2022 offset by revenues accounted for as at March 31, 2023.

Prepaid expenses

As at March 31, 2023 prepaid expenses totaled $212 compared with $137 as of December 31, 2022. The increase may be explained by advance payments made in January 2023.

Investment tax credits receivable

R&D investment tax credits receivable totaled approximately $196 as at March 31, 2023 compared with $159 as at December 31, 2022. The increase is attributable to the accrual estimated and recorded for the first three months of 2023.

Leasehold improvements and equipment

As at March 31, 2023, the net book value of leasehold improvements and equipment amounted to $4,318, compared to $4,425 at December 31, 2022. In the three-month period ended March 31, 2023 additions to assets totaled $74 and mainly comprised of $33 for lab equipment, $33 for leasehold improvements and $8 for manufacturing equipment, and variation of foreign exchange fluctuation, offset by depreciation expense of $192.

Security deposit

A security deposit in the amount of CA$300 ($222) in respect of an agreement to lease approximately 17,000 square feet in a property located at 6420 Abrams, St-Laurent, Quebec, Canada was recorded as at March 31, 2023. Security deposits in the amount of CA$26 ($19) for utilities and CA$5 ($4) for Cannabis license were also recorded as at March 31, 2023. Security deposit in the amount of CA$263 ($194) for Company credit cards was also recorded as at March 31, 2023 but classified as short-term.

Accounts payable and accrued liabilities

Accounts payable and accrued liabilities totaled $2,514 as at March 31, 2023 compared with $2,102 as at December 31, 2022. The increase is attributable to an increase in trade payable for R&D and Manufacturing costs incurred and an increase in the accrual recorded for DSUs granted to directors.

Loan payable

Loan payable totaled $8,500 as at March 31, 2023 compared with $5,500 as at December 31, 2022. atai has granted the to the Company a secured loan in the amount of $8,500, bearing interest at 8%. The loan is guaranteed by the Company and secured by all present and future movable property, rights and assets of the Company, excluding any intellectual property or technology controlled or owned by the Company.

The loan will mature on January 5, 2024. The interest for the three-month period ended March 31, 2023 amounts to $164 and is recorded in financing and interest expense ($91 in 2022).

Convertible notes

Convertible notes totaled $4,957 as at March 31, 2023 as compared to $4,272 as at December 31, 2022. The convertible notes have been recorded as a liability. The accretion expense for the period ended March 31, 2023 amounts to $48 ($42 in 2022). The interest on the convertible notes as at March 31, 2023 amounts to $97 ($95 in 2022) and is recorded in Financing and interest expense.

Shareholders' equity

As at March 31, 2023, we had accumulated a deficit of $71,454 compared with an accumulated deficit of $68,530 as at December 31, 2022. Total assets amounted to $10,341 and shareholders' deficit totaled $6,313 as at March 31, 2023, compared with total assets and shareholders' deficit of $9,190 and $3,423 respectively, as at December 31, 2022.

Capital stock

As at March 31, 2023 capital stock amounted to $1.746 (December 31, 2022: $1.746). 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 $67,370 as at March 31, 2023, as compared to $67,340 as at December 31, 2022. Additional paid in capital increased by $30 from which $19 was the value of the Agents' warrants in connection with the March 2023 private placement and $11 was from stock based compensation attributable to the amortization of stock options granted to employees.

Taxation

As at December 31, 2022, the date of our latest annual tax return, we had Canadian and provincial net operating losses of approximately $45,041 (December 31, 2021: $39,823) and $52,004 (December 31, 2021: $43,482) respectively, which may be applied against earnings of future years. Utilization of the net operating losses is subject to significant limitations imposed by the change in control provisions. Canadian and provincial losses will be expiring between 2026 and 2042. A portion of the net operating losses may expire before they can be utilized.

As at December 31, 2022, the Company had non-refundable tax credits of $3,004 thousand (2021: $2,912 thousand) of which $8 thousand is expiring in 2026, $10 thousand is expiring in 2027, $166 thousand is expiring in 2028, $146 thousand is expiring in 2029, $124 thousand is expiring in 2030, $132 thousand is expiring in 2031, $166 thousand is expiring in 2032, $110 thousand is expiring in 2033, $84 thousand expiring in 2034, $98 thousand is expiring in 2035, $136 thousand expiring in 2036, $259 thousand is expiring in 2037, $558 thousand expiring in 2038, $338 thousand expiring in 2039, $220 thousand expiring in 2040, $225 thousand expiring in 2041, and $224 expiring in 2042 and undeducted research and development expenses of $17,031 thousand (2021: $16,566 thousand) with no expiration date.

The deferred tax benefit of these items was not recognized in the accounts as it has been fully provided for.

Key items from the statement of cash flows

		March 31, 2023			March 31, 2022			Increase/ (Decrease)		Percentage Increase/ (Decrease)
Operating Activities	$	(2,262	)	$	(2,287	)	$	25		(1%)
Financing Activities		3,648			2,991			657		22%
Investing Activities		(74	)		1,955			(2,029	)	(104%)
Cash - end of period		2,520			6,614			(4,094	)	(62%)

Statement of cash flows

Net cash used in operating activities was $2,262 for the three-month period ended March 31, 2023, compared to $2,287 for the three-month period ended March 31, 2022. For the three-month period ended March 31, 2023, net cash used by operating activities consisted of a net loss of $2,924 (2022: $2,686) before depreciation, accretion expense, stock-based compensation, DSU expense and lease non-cash expense in the amount of $396 (2022: $387) and an increase in non-cash operating elements of working capital of $266 (2022: $12).

The net cash provided by financing activities was $3,648 for the three-month period ended March 31, 2023, compared to $2,991 for the same period of 2022. For the three-month period ended March 31, 2023, an amount of $3,000 derives from the issuance of a loan and an amount of $697 derives from net proceeds from convertible notes, offset by transaction costs of convertible notes of $40 and finance lease payments of $9. For the three-month period ended March 31, 2022, an amount of $3,000 derives from issuance of a loan, offset by finance lease payments for an amount of $9.

Net cash used in investing activities amounted to $74 for the three-month period ended March 31, 2023, compared to net cash provided by investing activities of $1,955 for the three-month period ended March 31, 2022. The net cash used in investing activities for the three-month period ended March 31, 2023 relates to the purchase of fixed assets of $74. The net cash provided by investing activities for the three-month period ended March 31, 2022 relates to the redemption of short-term investments of $5,719, offset by the acquisition of short-term investments of $3,700 and the purchase of fixed assets of $64.

The balance of cash as at March 31, 2023 amounted to $2,520, compared to $6,614 as at March 31, 2022.

Off-balance sheet arrangements

We have no off-balance sheet arrangements.

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.

Item 4. (Reserved)

Item 5. Other Information

This Item is not applicable.

Item 6. Exhibits

Exhibit 31.1	Certification of C.E.O. Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 31.2	Certification of Principal Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 32.1	Certification of C.E.O. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 32.2	Certification of Principal Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS	Inline XBRL Instance Document–the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document

101.SCH	Inline XBRL Taxonomy Extension Schema Document

101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document

104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

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 CORP.

Date: May 11, 2023	By:	/s/ Dwight Gorham
		Dwight Gorham
		Chief Executive Officer

Date: May 11, 2023	By:	/s/ Andre Godin
		Andre Godin
		Principal Accounting Officer