IntelGenx Corp (TSX-V:IGX) and Tilray Inc (NASDAQ:TLRY) said on Wednesday they have executed a license, development and supply agreement to co-develop and commercialize oral film products infused with adult-use and medical cannabis.
Under the agreement, IntelGenx and Tilray will each fund 20% and 80% of the costs associated with the development of the cannabis-infused Versafilm products, respectively.
IntelGenx will have the exclusive right to manufacture and supply the co-developed products to Tilray and will also receive a fixed single-digit royalty on net product sales, a statement by the two companies said. Tilray will have the exclusive, worldwide marketing and distribution rights for the co-developed products.
“With IntelGenx having the only Health Canada compliant and licensed facility for pharmaceutical oral film manufacturing, we are excited to establish this important partnership with Tilray...a company that shares our enthusiasm about the prospects for oral thin film delivery,” said Doctor Horst Zerbe, the president and CEO of IntelGenx.
“Over the long-term, we believe a significant portion of the global cannabis market will be focused on non-combustible products,” said Woody Pastorius, chief revenue officer of Tilray. “Through this partnership, we look forward to co-developing oral film products infused with cannabis that we intend to market and distributed in Canada and other markets around the world as regulations permit.”
Shares of IntelGenx rose 3.7% to C$0.84 while Tilray stock gained 5.68% to US$112.93.
READ: Maxim Group initiates coverage of IntelGenx Technologies with Buy recommendation and US$3 price target
As part of the deal, the parties executed a subscription agreement under which Tilray will make a strategic investment in IntelGenx by way of a non-brokered private placement.
In the private placement, Tilray will buy 1,428,571 common shares of IntelGenx at a price of US$0.70 per share for gross proceeds going to IntelGenx of $1 million.
The price of $0.70 per share, rather than the $0.80 per share price which had been proposed in the non-binding letter of intent between the parties and announced on September 20, 2018, represents the price per unit paid by investors under IntelGenx’s recent public offering.
IntelGenx intends to use the proceeds for cannabis-infused Versafilm product development. The private placement is expected to close on or about November 9, 2018,
IntelGenx is a leading oral drug delivery company focused on the development and manufacturing of innovative pharmaceutical oral films based on its proprietary VersaFilm technology platform. The company is based in Saint Laurent, Quebec.
Tilray is a Canadian pharmaceutical and cannabis company headquartered in Nanaimo, British Columbia.
Reporting by Rene Pastor, contactable on [email protected]