IntelGenx Partners with Tilray to Create Cannabis-infused Oral Strips

As the October legalization of cannabis edibles in Canada nears, marijuana firms in the country have been working to develop a host of foods and beverages — from gummies to cannabis-infused pop — for the recreational market.

Now consumers will be able to experience the effects of cannabis in a new form: oral strips.

IntelGenx (TSXV:IGX,OTCQX:IGXT), an oral drug delivery company, is working with Tilray (NASDAQ:TLRY) to create cannabis-infused films for both recreational and medical use, with plans to distribute them across Canada later this year and internationally.

The Investing News Network (INN) spoke with IntelGenx CEO Horst Zerbe and CFO Andre Godin about the newest addition to the realm of edible marijuana products.

Conventional methods of taking drugs — like swallowing pills — create a situation where the active ingredients reach the liver where they are “metabolically destroyed” before entering the bloodstream, said Zerbe. Oral films, however, circumvent that issue.

“Oral absorption of the active (ingredient), whether that be (tetrahydrocannabinol) or (cannabidiol), leads to a direct migration of the active (ingredient) into the bloodstream,” Zerbe told INN. “The result is more drugs available for … therapeutic activities.”

He added that the company’s use of its VersaFilm technology will contain a carefully measured amount of the drug, offering precise dosing and reduced side effects to consumers, and will be packaged individually in child-proof pouches.

Zerbe said the cannabis film is intended to ensure the rapid onset of action once the drug is absorbed into the oral mucosa, the membrane that lines the inside of the mouth.

The Quebec-based pharmaceutical company inked the letter of intent with Tilray in September last year, agreeing to split the funding costs 80/20, with Tilray taking on the majority of the research and development and commercialization expenses. Though the products will be co-developed by both companies, Tilray will have exclusive distribution and marketing rights.

As a part of the deal, Tilray purchased 1.25 million common shares of IntelGenx at US$0.80 each.

The cannabis strips are set to be IntelGenx’s first commercial oral film product and will be marketed as adult-use items.

IntelGenx set out on this journey in earnest with Zerbe, the co-inventor of Listerine strips, at its helm earlier this year when it received its first shipment of cannabis extract from Tilray in May. In the months since, IntelGenx has been successful in infusing the strips with cannabis, adjusting for performance parameters like dissolve rate and residue, and is currently working on final improvements.

Before cannabis became legal in Canada, IntelGenx conducted research on the marijuana market in September 2018, the results of which encouraged the firm to further its research.

An online survey of 1,000 Canadians aged 19 to 80 found that 78 percent of people were likely to try a cannabis-infused dissolvable film for recreational use. That number jumped to 86 percent when people were asked about the likelihood of them using a film for medical purposes.

The research also found the appeal of oral films lies in their ease of use, discreetness and lack of harmful smoke.

Godin said the company was surprised by the results. After the market research, IntelGenx was approached by several cannabis companies before choosing to partner with Tilray. Godin cited the company’s medical program as a selling point.

However, the company faced a setback in April this year when the US Food and Drug Administration (FDA) issued a complete response letter to the pharmaceutical firm’s new drug application for Rizaport, a film created for migraine treatment. The federal agency requested more information for the chemistry, manufacturing and controls sections of the application.

IntelGenx’s shares dropped to C$0.70 from C$0.90 when news of the letter broke. Its share price sat at C$0.55 as of 10:05 a.m. EDT on Wednesday (September 4), a value decrease of almost 40 percent.

In its results for Q2 of this year, IntelGenx reported revenues of C$197,000, down from the C$234,000 reported in Q2 last year. The company attributed the decrease to a loss of research and development revenue. There was also a net loss of C$2.5 million for this quarter. Cash and short-term investments, however, were at C$6.1 million as of the quarter’s end, up from C$3.7 million in 2018’s Q2.

Godin ascribed some of the pressure on the stock to the FDA’s letter, saying the market “overreacted” to the news. He added that the company is prepared to resubmit its application for the migraine film this month.

The launch of the cannabis oral strips is expected to have a positive share price impact, Godin continued.

The executive also said IntelGenx’s position as a pharmaceutical company ensures its edible products will be made under good manufacturing practices, setting it apart from other edible producers.

Zerbe mentioned that, though the first round of cannabis films to hit the market will be for adult use, further forms of the strips will be directed at medical patients.

“We see immense potential in the medical space,” said Zerbe, adding that a cannabis film can be used to address conditions including schizophrenia and Parkinson’s disease.

Apart from marijuana films, IntelGenx is expected to launch strips for migraines and erectile dysfunction between 2020 and 2021.

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Securities Disclosure: I, Danielle Edwards, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.