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 June 30, 2019 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)

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

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:

93,527,474 shares of the issuer’s common stock, par value $.00001 per share, were issued and outstanding as of August 8, 2019.

IntelGenx Technologies Corp.
Form 10-Q

TABLE OF CONTENTS

	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Consolidated Balance Sheet	2
	Statement of Shareholders’ Equity	3
	Statement of Operations and Comprehensive Loss	4
	Statement of Cash Flows	5
	Notes to Financial Statements	6
Item 2.	Management's Discussion and Analysis and Results of Operations	22
Item 3.	Controls and Procedures	34
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 3.	Defaults upon Senior Securities	35
Item 4.	Reserved	35
Item 5.	Other Information	35
Item 6.	Exhibits	35
	Signatures	36

IntelGenx Technologies Corp.

Consolidated Interim Financial Statements
June 30, 2019
(Expressed in U.S. Funds)
(Unaudited)

Contents
Consolidated Balance Sheet	2
Consolidated Statement of Shareholders' Equity	3
Consolidated Statement of Comprehensive Loss	4
Consolidated Statement of Cash Flows	5
Notes to Consolidated Financial Statements	6 - 21

1

IntelGenx Technologies Corp.

Consolidated Balance Sheet
(Expressed in Thousands of U.S. Dollars ($000’s) Except Share and Per Share Data)
(Unaudited)

		June 30,			December 31,
		2019			2018
Assets
Current
Cash	$	5,581		$	6,815
Short-term investments		562			4,180
Accounts receivable		466			815
Prepaid expenses		358			462
Investment tax credits receivable		625			416
Inventory (note 5)		391			375
Total current assets		7,983			13,063
Leasehold improvements and equipment, net (note 6)		6,374			6,248
Security deposits		737			707
Operating lease right-of-use asset (note 14)		717			-
Total assets	$	15,811		$	20,018
Liabilities
Current
Accounts payable and accrued liabilities		1,520			2,030
Current portion of long-term debt (note 8)		740			692
Current portion of operating lease liability		135			-
Total current liabilities		2,395			2,722
Deferred lease obligations		-			49
Long-term debt (note 8)		827			1,140
Convertible debentures (note 9)		5,424			5,047
Convertible notes (note 10)		1,159			1,073
Operating lease liability		588			-
Total liabilities		10,393			10,031
Subsequent event (note 17)
Shareholders' equity
Capital stock, common shares, $0.00001 par value; 200,000,000 shares authorized; 93,527,473 shares issued and outstanding (2018: 93,477,473 common shares) (note 11)		1			1
Additional paid-in capital (note 12)		42,250			42,048
Accumulated deficit		(36,039	)		(30,896	)
Accumulated other comprehensive loss		(794	)		(1,166	)
Total shareholders’ equity		5,418			9,987
	$	15,811		$	20,018

See accompanying notes

Approved on Behalf of the Board:

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

2

IntelGenx Technologies Corp.

Consolidated Statement of Shareholders' Equity
For the Period Ended June 30, 2019
(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			Equity
Balance - December 31, 2018	93,477,473	$	1	$	42,048	$	(30,896	)	$	(1,166	)	$	9,987
Modified retrospective adjustment upon adoption of ASC 842	-		-		-		49			-			49
Other comprehensive income	-		-		-		-			372			372
Options exercised (note 12)	50,000		-		21		-			-			21
Stock-based compensation (note 12)	-		-		181		-			-			181
Net loss for the period	-		-		-		(5,192	)		-			(5,192	)
Balance – June 30, 2019	93,527,473	$	1	$	42,250	$	(36,039	)	$	(794	)	$	5,418

See accompanying notes

3

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						For the Six-Month Period
		Ended June 30,						Ended June 30,
		2019			2018			2019			2018
Revenues (note 13)	$	197		$	234		$	613		$	473
Total revenues		197			234			613			473
Expenses
Research and development expense		1,182			857			2,042			1,654
Selling, general and administrative expense		1,181			1,322			2,885			2,602
Depreciation of tangible assets		172			179			343			362
Total expenses		2,535			2,358			5,270			4,618
Operating loss		(2,338	)		(2,124	)		(4,657	)		(4,145	)
Interest income		32			-			61			-
Net financing and interest expense		(298	)		(277	)		(596	)		(520	)
Net loss		(2,604	)		(2,401	)		(5,192	)		(4,665	)
Other comprehensive income (loss)
Foreign currency translation adjustment		117			(35	)		340			(107	)
Change in fair value		8			4			32			(1	)
		125			(31	)		372			(108	)
Comprehensive loss	$	(2,479	)	$	(2,432	)	$	(4,820	)	$	(4,773	)
Basic and diluted weighted average number of shares outstanding		93,527,473			68,877,428			93,523,329			68,346,126
Basic and diluted loss per common share (note 16)	$	(0.03	)	$	(0.04	)	$	(0.05	)	$	(0.07	)

See accompanying notes

4

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						For the Six-Month Period
		Ended June 30,						Ended June 30,
		2019			2018			2019			2018
Funds (used) provided -
Operating activities
Net loss	$	(2,604	)	$	(2,401	)	$	(5,192	)	$	(4,665	)
Depreciation of tangible assets		172			179			343			362
Stock-based compensation		95			73			181			123
Accretion expense		124			94			244			167
DSU expense		(98	)		232			112			232
Interest payable by issuance of common shares		-			238			-			238
Lease expense		3						6
		(2,308	)		(1,585	)		(4,306	)		(3,543	)
Changes in non-cash items related to operations:
Accounts receivable		208			170			349			138
Prepaid expenses		37			(215	)		104			(387	)
Investment tax credits receivable		(107	)		(68	)		(209	)		(137	)
Security deposits		-			(11	)		-			(11	)
Accounts payable and accrued liabilities		(134	)		199			(635	)		239
Net change in non-cash items related to operations		4			75			(391	)		(158	)
Net cash used in operating activities		(2,304	)		(1,510	)		(4,697	)		(3,701	)
Financing activities
Repayment of term loans		(178	)		(185	)		(337	)		(372	)
Proceeds from exercise of warrants and stock options		-			154			21			549
Net proceeds from private placement		-			3,004			-			3,004
Transaction costs of private placement		-			(82	)		-			(82	)
Net cash (used in) provided by financing activities		(178	)		2,891			(316	)		3,099
Investing activities
Additions to leasehold improvements and equipment		(141	)		(16	)		(211	)		(454	)
Redemption of short-term investments		1,453			393			5,184			1,908
Acquisition of short-term investments		-			-			(1,469	)		-
Net cash provided by investing activities		1,312			377			3,504			1,454
(Decrease) Increase in cash		(1,170	)		1,758			(1,509	)		852
Effect of foreign exchange on cash		124			(55	)		275			(122	)
Cash
Beginning of period		6,627			618			6,815			1,591
End of period	$	5,581		$	2,321		$	5,581		$	2,321

See accompanying notes

5

IntelGenx Technologies Corp.

Notes to Consolidated Interim Financial Statements

June 30, 2019

(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, 2018. Operating results for the six months ended June 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). 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 the Company and its subsidiary companies. 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, bank loans, royalty, up-front and milestone payments, license fees, proceeds from exercise of warrants and options, research and development revenues and the sale of U.S. royalty on future sales of Forfivo XL®. 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 June 30, 2019, the Company had cash and short-term investments totaling approximately $6,143. 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:

6

IntelGenx Technologies Corp.

Notes to Consolidated Interim Financial Statements

June 30, 2019

(Expressed in U.S. Funds)

(Unaudited)

2. Going Concern (Cont'd)

• 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.

• Initiate oral film manufacturing activities.

• Initiate contract oral film manufacturing activities.

	If the Company is unable to raise 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 delay, reduce or eliminate its research and development programs.
	The accompanying consolidated interim 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 interim 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.	Adoption of New Accounting Standards
	The Company adopted Topic 842 Leases with a date of the initial application of January 1, 2019. As a result, the Company has changed its accounting policy for leases as detailed below.
	The Company adopted Topic 842 using a modified retrospective approach with a date of initial application of January 1, 2019, which requires the recognition of the right-of-use assets and related operating and finance lease liabilities on the balance sheet. As a result, the consolidated balance sheet prior to January 1, 2019 was not restated, continues to be reported under ASC Topic 840, Leases, or ASC 840, which did not require the recognition of operating lease liabilities on the balance sheet, and is not comparative. Under ASC 842, all leases are required to be recorded on the balance sheet and are classified as either operating or finance leases. The lease classification affects the expense recognition in the income statement. Operating lease charges are recorded entirely in selling, general and administrative expense. Finance lease charges are split, where amortization of the right-of-use asset is recorded in selling, general and administrative expense and an implied interest component is recorded in financing and interest expense. At the moment of initial application, the Company did not hold any finance leases. The expense recognition for operating leases under ASC 842 is substantially consistent with ASC 840. As a result, there is no significant difference in our results of operations presented in our consolidated income statement and consolidated statement of comprehensive loss for each period presented.

7

IntelGenx Technologies Corp.

Notes to Consolidated Interim Financial Statements

June 30, 2019

(Expressed in U.S. Funds)

(Unaudited)

3.	Adoption of New Accounting Standards (Cont’d)
	The adoption of ASC 842 had a substantial impact on the Company’s balance sheet. The most significant impact was the recognition of the operating lease right-of-use asset and operating lease liability. Upon adoption, leases that were classified as operating leases under ASC 840 were classified as operating leases under ASC 842, and the Company recorded an adjustment of $726 to operating lease right-of-use asset and the related operating lease liability. The operating lease liability is based on the present value of the remaining minimum lease payments, determined under ASC 840, discounted using our secured incremental borrowing rate at the effective date of January 1, 2019, using the original lease term and the tenor. As permitted under ASC 842, the Company elected to use the practical expedient that permits to use hindsight in determining the lease term. The application of the practical expedients did not have a significant impact on the measurement of the operating lease liability.
	The impact of the adoption of ASC 842 on the balance sheet as at December 31, 2018 was:

		As reported		Adoption of ASC 842			Balance
		December 31, 2018		Increase (Decrease)			January 1, 2019
Operating lease right-of-use assets	$	-	$	726		$	726
Total assets		20,018		726			20,744
Total current liabilities		2,722		127			2,849
Deferred lease obligations		49		(49	)		-
Operating lease liability		-		599			599
Total liabilities		10,031		677			10,708
Total shareholders’ equity		9,987		49			10,036
Total liabilities and shareholders’ equity		20,018		726			20,744

The FASB issued ASU 2018-07 to expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from non-employees. These amendments are effective for a public business entity for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The adoption of this statement did not have a material effect on the Company’s financial position of results.

8

IntelGenx Technologies Corp.

Notes to Consolidated Interim Financial Statements

June 30, 2019

(Expressed in U.S. Funds)

(Unaudited)

4.	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.
	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.

9

IntelGenx Technologies Corp.

Notes to Consolidated Interim Financial Statements

June 30, 2019

(Expressed in U.S. Funds)

(Unaudited)

4.	Significant Accounting Policies (Cont’d)
	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

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 and the Company does not hold any finance 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.

10

IntelGenx Technologies Corp.

Notes to Consolidated Interim Financial Statements

June 30, 2019

(Expressed in U.S. Funds)

(Unaudited)

4.	Significant Accounting Policies (Cont’d)
	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 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.
	Recent Accounting Pronouncements
	ASU 2019-05 Credit Losses (Topic 326): Targeted Transition Relief
	The FASB issued ASU 2019-05 which provides entities that have certain instruments within the scope of Subtopic 326-20, Financial Instruments – Credit Losses – Measured at Amortized Cost, with an option to irrevocably elect the fair value option in Subtopic 825-10, Financial Instruments – Overall, applied on an instrument-by-instrument basis for eligible instruments, upon adoption of Topic 326. The fair value option election does not apply to held- to-maturity debt securities. An entity that elects the fair value option should subsequently apply the guidance in Subtopics 820-10, Fair Value Measurement – Overall, and 825-10.
	These amendments are effective for fiscal years beginning after December 15, 2019. The Company is currently evaluating the impact of this Statement on its consolidated financial statements.
	ASU 2018-19 Codification Improvements to Topic 326, Financial Instruments—Credit Losses
	The FASB issued ASU 2018-19 which mitigates transition complexity by requiring entities other than public business entities, including not-for-profit organizations and certain employee benefit plans, to implement the credit losses standard issued in 2016, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. This aligns the implementation date for their annual financial statements with the implementation date for their interim financial statements. The guidance also clarifies that receivables arising from operating leases are not within the scope of the credit losses standard, but rather, should be accounted for in accordance with the leases standard.

11

IntelGenx Technologies Corp.

Notes to Consolidated Interim Financial Statements

June 30, 2019

(Expressed in U.S. Funds)

(Unaudited)

4.	Significant Accounting Policies (Cont’d)
	These amendments are effective for fiscal years beginning after December 15, 2019. The Company is currently evaluating the impact of this Statement on its consolidated financial statements.
	ASU 2018-18 Collaborative Arrangements (Topic 808): Clarifying the Interaction Between Topic 808 and Topic 606
	The FASB issued ASU 2018-18 which provides guidance on how to assess whether certain transactions between collaborative arrangement participants should be accounted for within the revenue recognition standard.
	The ASU also provides more comparability in the presentation of revenue for certain transactions between collaborative arrangement participants. It accomplishes this by allowing organizations to only present units of account in collaborative arrangements that are within the scope of the revenue recognition standard together with revenue accounted for under the revenue recognition standard. The parts of the collaborative arrangement that are not in the scope of the revenue recognition standard should be presented separately from revenue accounted for under the revenue recognition standard.
	These amendments are effective for fiscal years beginning after December 15, 2019. The Company is currently evaluating the impact of this Statement on its consolidated financial statements.
	ASU 2018-13 – Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement
	The FASB issued ASU 2018-13 which modifies the disclosure requirements in Topic 820 as follows:
	Removals
	-The amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy;
	-The policy for timing of transfers between levels;
	-The valuation processes for Level 3 fair value measurements; and
	-For nonpublic entities, the changes in unrealized gains and losses for the period included in earnings for recurring Level 3 fair value measurements held at the end of the reporting period.
	Modifications
	-In lieu of a rollforward for Level 3 fair value measurements, a nonpublic entity is required to disclose transfers into and out of Level 3 of the fair value hierarchy and purchases and issues of Level 3 assets and liabilities;
	-For investments in certain entities that calculate net asset value, an entity is required to disclose the timing of liquidation of an investee’s assets and the date when restrictions from redemption might lapse only if the investee has communicated the timing to the entity or announced the timing publicly; and
	-The amendments clarify that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date.

12

IntelGenx Technologies Corp.

Notes to Consolidated Interim Financial Statements

June 30, 2019

(Expressed in U.S. Funds)

(Unaudited)

4.	Significant Accounting Policies (Cont’d)
	Additions
	-The changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period; and
	- The range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. For certain unobservable inputs, an entity may disclose other quantitative information (such as the median or arithmetic average) in lieu of the weighted average if the entity determines that other quantitative
	information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements.
	These amendments are effective for fiscal years beginning after December 15, 2019. The Company is currently evaluating the impact of this Statement on its consolidated financial statements.
5.	Inventory
	Inventory as at June 30, 2019 consisted of raw materials in the amount of $391 (2018: $375).
6.	Leasehold Improvements and Equipment

								December 31,
						June 30, 2019		2018
				Accumulated		Net Carrying		Net Carrying
		Cost		Depreciation		Amount		Amount
Manufacturing equipment	$	4,378	$	731	$	3,647	$	3,512
Laboratory and office equipment		1,343		801		542		562
Computer equipment		124		76		48		39
Leasehold improvements		3,237		1,100		2,137		2,135
	$	9,082	$	2,708	$	6,374	$	6,248

From the balance of manufacturing equipment, an amount of $1,775 thousand (2018: $1,703 thousand) represents assets which are still under construction as at June 30, 2019 and are consequently not depreciated.

13

IntelGenx Technologies Corp.

Notes to Consolidated Interim Financial Statements

June 30, 2019

(Expressed in U.S. Funds)

(Unaudited)

7.	Bank Indebtedness
	The Company's credit facility is subject to review annually and consists of an operating demand line of credit of up to CAD$250 thousand ($191 thousand) and corporate credits cards of up to CAD$75 ($57 thousand) and foreign exchange contracts limited to CAD$425 thousand ($325 thousand). Borrowings under the operating demand line of credit bear interest at the Bank’s prime lending rate plus 2%. The credit facility and term loan (see note 8) are secured by a first ranking movable hypothec on all present and future movable property of the Company for an amount of CAD$4,250,000 ($3,247,500) plus 20%, and a 50% guarantee by Export Development Canada, a Canadian Crown corporation export credit agency. The terms of the banking agreement require the Company to comply with certain debt service coverage and debt to net worth financial covenants on an annual basis at the end of the Company’s fiscal year. As at June 30, 2019, the Company has not drawn on its credit facility.
8.	Long-term Debt
	The components of the Company’s debt are as follows:

	June 30, 2019	December 31, 2018
	$	$
Term loan facility	1,287	1,502
Secured loan	280	330
Total debt	1,567	1,832
Less: current portion	740	692
Total long-term debt	827	1,140

The Company’s term loan facility consists of a total of CAD$4 million ($3.06 million) bearing interest at the Bank’s prime lending rate plus 2.50%, with monthly principal repayments of CAD$62 thousand ($47 thousand). The term loan is subject to the same security and financial covenants as the bank indebtedness (see note 7).

The secured loan has a principal balance authorized of CAD$1 million ($764 thousand) bearing interest at prime plus 7.3%, reimbursable in monthly principal payments of CAD$17 thousand ($13 thousand) from January 2017 to March 2021. The loan is secured by a second ranking on all present and future property of the Company. The terms of the banking agreement require the Company to comply with certain debt service coverage and debt to net worth financial covenants on an annual basis at the end of the Company’s fiscal year.

Principal repayments due in each of the next three years are as follows:

2019	379 (CAD 497)
2020	722 (CAD 945)
2021	466 (CAD 610)

14

IntelGenx Technologies Corp.

Notes to Consolidated Interim Financial Statements

June 30, 2019

(Expressed in U.S. Funds)

(Unaudited)

9.	Convertible Debentures
	On July 12, 2017, the Company closed its previously announced prospectus offering (the “Offering”) of convertible unsecured subordinated debentures of the Corporation (the “Debentures”) for gross aggregate proceeds of CAD$6,838,000 ($5,225,000). Pursuant to the Offering, the Corporation issued an aggregate principal amount of CAD$6,838,000 ($5,225,000) of Debentures at a price of CAD$1,000 ($764) per Debenture. The Debentures will mature on June 30, 2020 and bear interest at annual rate of 8% payable semi-annually on the last day of June and December of each year, commencing on December 31, 2017. The interest may be paid in common shares at the option of the Corporation. The Debentures will be convertible at the option of the holders at any time prior to the close of business on the earlier of June 30, 2020 and the business day immediately preceding the date specified by the Corporation for redemption of Debentures. The conversion price will be CAD$1.35 ($1.03) (the “Conversion Price”) per common share of the Corporation (“Share”), being a conversion rate of approximately 740 Shares per CAD$1,000 ($764) principal amount of Debentures, subject to adjustment in certain events.
	On August 8, 2017, the Company closed a second tranche of its prospectus Offering of convertible unsecured subordinated debentures of the Corporation for which a first closing took place on July 12, pursuant to which it had raised additional gross proceeds of CAD$762,000 ($582,000).
	Together with the principal amount of CAD$6,838,000 ($5,225,000) of Debentures issued on July 12, 2017, the Corporation issued a total aggregate principal amount of CAD$7,600,000 ($5,807,000) of Debentures at a price of CAD$1,000 ($764) per Debenture.
	The convertible debentures have been recorded as a liability. Total transactions costs in the amount of CAD$1,237,000 ($945,000) were recorded against the liability. The accretion expense for the six-month period ended June 30, 2019 amounts to CAD$213,000 ($160,000), compared to CAD$185,000 ($145,000) for the comparative period in 2018.
	The components of the convertible debentures are as follows:

		June 30,			December 31,
		2019			2018
Face value of the convertible debentures	$	5,791		$	5,556
Transaction costs		(945	)		(907	)
Accretion		578			398
Convertible debentures	$	5,424		$	5,047

The interest accrued on the convertible debentures for the six-month period ended June 30, 2019 amounts to CAD$303 thousand ($227 thousand) and is recorded in financing and interest expense. The interest on the convertible debentures for the six-month period ended June 30, 2018. amounted to CAD$304 thousand ($238 thousand) and was paid by issuance of 307,069 common shares.

15

IntelGenx Technologies Corp.

Notes to Consolidated Interim Financial Statements

June 30, 2019

(Expressed in U.S. Funds)

(Unaudited)

10.	Convertible Notes
	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), matures on June 1, 2021 and is convertible into Common Shares at a conversion price of $0.80 per Common Share. Each Warrant entitles 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.
	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

The convertible notes have been recorded as a liability. Total transactions costs in the amount of $111 thousand were recorded against the liability. The accretion expense for the six-month period ended June 30, 2019 amounts to $86,000 (2018: $22,000).

The components of the convertible notes are as follows:

		June 30,		December 31,
		2019		2018
Attributed value of net proceeds to convertible notes	$	975	$	975
Accretion		184		98
Convertible note	$	1,159	$	1,073

The interest on the convertible notes for the six-month period ended June 30, 2019 amounts to $48 thousand and is recorded in financing and interest expense (2018: $14).

16

IntelGenx Technologies Corp.

Notes to Consolidated Interim Financial Statements

June 30, 2019

(Expressed in U.S. Funds)

(Unaudited)

11. Capital Stock

		June 30,		December 31,
		2019		2018
Authorized -
200,000,000 common shares of $0.00001 par value   20,000,000 preferred shares of $0.00001 par value
Issued -
93,527,473 (December 31, 2018 - 93,477,473) common shares	$	1	$	1

12.	Additional Paid-In Capital
	Stock options
	On March 27, 2019, 100,000 options to purchase common stock were granted to an employee under the 2016 Stock Option Plan. The options have an exercise price of $0.69. 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 $40 thousand.
	On January 16, 2018, 100,000 options to purchase common stock were granted to an employee under the 2016 Stock Option Plan. The options have an exercise price of $0.79. 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 $44 thousand.
	On April 10, 2018, 275,000 options to purchase common stock were granted to employees under the 2016 Stock Option Plan. The options have an exercise price of $0.66. 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 $99 thousand.
	On June 11, 2018, 800,000 options to purchase common stock were granted to officers and employees under the 2016 Stock Option Plan. The options have an exercise price of $0.76. 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 $334 thousand.
	During the six-month period ended June 30, 2019 a total of 50,000 stock options were exercised for 50,000 common shares having a par value of $0 thousand in aggregate, for cash consideration of $21 thousand, resulting in an increase in additional paid-in capital of $21 thousand.
	During the six-month period ended June 30, 2018 a total of 25,000 stock options were exercised for 25,000 common shares having a par value of $0 thousand in aggregate, for cash consideration of $13 thousand, resulting in an increase in additional paid-in capital of $13 thousand.

17

IntelGenx Technologies Corp.

Notes to Consolidated Interim Financial Statements

June 30, 2019

(Expressed in U.S. Funds)

(Unaudited)

12.	Additional Paid-In Capital (Cont’d)
	Compensation expenses for stock-based compensation of $181 thousand and $123 thousand were recorded during the six-month periods ended June 30, 2019 and 2018, respectively. An amount of $157 thousand expensed in the six-month period ended June 30, 2019 relates to stock options granted to employees and directors and an amount of $24 thousand relates to stock options granted to consultants. An amount of $119 thousand expensed in the six-month period ended June 30, 2018 relates to stock options granted to employees and directors and an amount of $4 thousand relates to stock options granted to a consultant. As at June 30, 2019, the Company has $333 thousand (2018 - $550 thousand) of unrecognized stock-based compensation.
	Warrants
	During the six-month period ended June 30, 2018 a total of 950,000 warrants were exercised for 950,000 common shares having a par value of $Nil in aggregate, for cash consideration of approximately $536 thousand, resulting in an increase in additional paid-in capital of approximately $536 thousand. No warrants were exercised during the six-month period ended June 30, 2019.
	Deferred Share Units (“DSUs”)
	Effective February 7, 2018, the Board approved a Deferred Share Unit Plan (DSU Plan) to compensate non- employee directors as part of their annual remuneration. Under the DSU Plan, the Board may grant Deferred Share Units (“DSUs”) to the participating directors at its discretion and, in addition, each participating director may elect to receive all or a portion of his or her annual cash stipend in the form of DSUs. To the extent DSUs are granted, the amount of compensation that is deferred is converted into a number of DSUs, as determined by the market price of our Common Stock on the effective date of the election. These DSUs are converted back into a cash amount at the expiration of the deferral period based on the market price of our Common Stock on the expiration date and paid to the director in cash in accordance with the payout terms of the DSU Plan. As the DSUs are on a cash-only basis, no shares of Common Stock will be reserved or issued in connection with the DSUs. On March 27, 2019, 271,740 DSUs (287,355 on May 16, 2018) have been granted under the DSU Plan, accordingly, an amount of $132 thousand ($232 thousand in 2018) has been recognized in general and administrative expenses.
	Performance and Restricted Share Units (“PRSUs”)
	No PRSUs were granted during the six-month periods ended June 30, 2019 and 2018.

18

IntelGenx Technologies Corp.

Notes to Consolidated Interim Financial Statements

June 30, 2019

(Expressed in U.S. Funds)

(Unaudited)

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

		June 30, 2019		June 30, 2018
Research and development agreements	$	613	$	473

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

		June 30, 2019		June 30, 2018
(in U.S. $ thousands)
Product and services transferred at point in time	$	371	$	-
Products and services transferred over time		242		473
	$	613	$	473

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

		June 30, 2019		June 30, 2018
Europe	$	534		410
Canada		79		63
	$	613	$	473

Remaining performance obligations

As at June 30, 2019, the aggregate amount of the transaction price allocated to the remaining performance obligation is $1,525 representing research and development agreements, the majority of which is expected to be recognized in the next twelve months. The Company is also eligible to receive up to $4,560 in research and development milestone payments, approximately 60% of which is expected to be recognized in the next three years, with the remaining 40% expected in the two years following; up to $28,339 in commercial sales milestone payments, the majority of which is expected to be recognized in the next five years, but is wholly dependent on the marketing efforts of our development partners. In addition, the Company is entitled to receive royalties on potential sales.

19

IntelGenx Technologies Corp.

Notes to Consolidated Interim Financial Statements

June 30, 2019

(Expressed in U.S. Funds)

(Unaudited)

14.	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 six-month period ended June 30, 2019 included in general and administrative expenses is $76 thousand. The cash outflows from operating leases for the six-month period ended June 30, 2019 was $70 thousand.
	The weighted average remaining lease term and the weighted average discount rate for operating leases at June 30, 2019 were 6.7 years and 10%, respectively.
	The following table reconciles the undiscounted cash flows for the operating leases as et June 30, 2019 to the operating lease liabilities recorded on the balance sheet:

		Operating Leases
2019 Remainder	$	74
2020		149
2021		151
2022		155
2023		156
2024		160
Thereafter		187
Total undiscounted lease payments		1,032
Less: Interest		309
Present value of lease liabilities	$	723

Current portion of operating lease liability	$135
Operating lease liability	$588

20

IntelGenx Technologies Corp.

Notes to Consolidated Interim Financial Statements

June 30, 2019

(Expressed in U.S. Funds)

(Unaudited)

15.	Related Party Transactions
	Included in management salaries for the six-month period ended June 30, 2019 are $40 thousand (2018 - $17) for options granted to the Chief Executive Officer, $27 thousand (2018 - $7 thousand) for options granted to the President and Chief Financial Officer, $15 (2018 - $6) for options granted to the Vice President, Operations, $17 thousand (2018 - $6 thousand) for options granted to the Vice-President, Research and Development, $17 thousand (2018 – $23 thousand) for options granted to Vice-President, Business and Corporate Development under the 2016 Stock Option Plan and $Nil (2018 - $6 thousand) for options granted to non-employee directors.
	Also included general and administrative expense for the six-month period ended June 30, 2019 are director fees of $116 thousand (2018 - $124 thousand) and DSU of $117 thousand (2018: $232).
	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.
16.	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.
17.	Subsequent Event
	On July 9, 2019, IntelGenx terminated the potential acquisition of Laboval. As a result of the termination, the deposit in the amount of CAD$275,000 ($210,000) in trust will be forfeited and transferred to Laboval as required under the terms of the LOI.

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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

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 six-month period ended June 31, 2019 and 2018.

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 Interim Financial Statements and Notes thereto. We also encourage you to refer to the Company’s MD&A for the year ended December 31, 2018. In preparing this MD&A, we have taken into account information available to us up to August 8, 2019, 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, 2018 (the "2019 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 2019 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.

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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.

More recently, we have made the strategic decision to enter the oral film market and have implemented commercial oral film manufacturing capability. This enables us to offer our partners a comprehensive portfolio of pharmaceutical services, including pharmaceutical R&D, clinical monitoring, regulatory support, tech transfer and manufacturing scale-up, and commercial manufacturing.

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, license the commercial rights to partners in the pharmaceutical industry. In certain cases, we rely upon partners in the pharmaceutical industry to fund the development of the licensed products, complete the regulatory approval process with the 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. Our primary growth strategies are based on three pillars: (1) out licensing commercial rights of our existing pipeline products, (2) partnering on contract development and manufacturing projects leveraging our VersaFilm™ technology, (3) expanding our current pipeline through:

• identifying lifecycle management opportunities for existing market leading pharmaceutical products,

• develop oral film products that provide tangible patient benefits,

• development of new drug delivery technologies,

• repurposing existing drugs for new indications, and

• developing generic drugs where high technology barriers to entry exist in reproducing branded films.

Contract Development and Manufacturing based on VersaFilm™ technology
We have established a state-of-the-art manufacturing facility for the future manufacture of our VersaFilm™ products. We believe that this (1) represents a profitable business opportunity, (2) will reduce our dependency upon third-party contract manufacturers, thereby protecting our manufacturing process know-how and intellectual property, and (3) allows us to offer our development partners a full service from product conception through to supply of the finished product.

Lifecycle Management Opportunities
We are seeking to position our delivery technologies as an opportunity for lifecycle management of products for which patent protection of the active ingredient is nearing expiration. While the patent for the underlying substance cannot be extended, patent protection can be obtained for a new and improved formulation by filing an application with the FDA under Section 505(b)(2) of the U.S. Federal Food, Drug and Cosmetic Act. Such applications, known as a "505(b)(2) NDA", are permitted for new drug products that incorporate previously approved active ingredients, even if the proposed new drug incorporates an approved active ingredient in a novel formulation or for a new indication. A 505(b)(2) NDA may include information regarding safety and efficacy of a proposed drug that comes from studies not conducted by or for the applicant. The first formulation for a respective active ingredient filed with the FDA under a 505(b)(2) application may qualify for up to five years of market exclusivity upon approval. Based upon a review of past partnerships between third party drug delivery companies and pharmaceutical companies, management believes that drug delivery companies which possess innovative technologies to develop these special dosage formulations present an attractive opportunity to pharmaceutical companies. Accordingly, we believe "505(b)(2) products" represent a viable business opportunity for us.

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Product Opportunities that provide Tangible Patient Benefits
Our focus will be on developing 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™, and our AdVersa® mucosal adhesive tablet, are two examples 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.

Repurposing Existing Drugs
We are working on the repurposing of already approved drugs for new indications using our VersaFilm™ film technology. This program represents a viable growth strategy for us as it will allow for reduced development costs, improved success rates and shorter approval times. We believe that through our repurposing program we will be able minimize the risk of developmental failure and create value for us and potential partners.

Generic Drugs with High Barriers to Entry
We plan to pursue the development of generic drugs that have certain barriers to entry, e.g., where product development and manufacturing is complex and can limit the number of potential entrants into the generic market. We plan to pursue such projects only if the number of potential competitors is deemed relatively insignificant.

Corporate

Manufacturing facility
We currently manufacture products only for clinical and testing purposes in our own facility and we do not yet manufacture products for commercial use. In order to establish ourselves as a full-service partner for our thin film products, we invested approximately $6.5 million to establish a state-of-the-art manufacturing facility for the commercial manufacture of products developed using our VersaFilm™ drug delivery technology. Since we recently received our cGMP-compliant rating from Health Canada for manufacturing and packaging activities, we anticipate the manufacturing of our products to commence on the second half of 2019.

Expansion to the existing Manufacturing Facility
On March 6, 2018 IntelGenx executed an agreement to lease approximately an additional 11,000 square feet in a property located at 6410 Abrams, St-Laurent, Quebec. The Lease has an 8 year and 5-month term commencing on October 1, 2018 and IntelGenx has retained two options to extend the Lease, with each option being for an additional five years. Under the terms of the Lease IntelGenx will be required to pay base rent of approximately CA$74 thousand (approximately $55 thousand) per year, which will increase at a rate of CA$0.25 ($0.19) per square foot every two years. IntelGenx plans to use the newly leased space to expand its manufacture of oral film VersaFilm TM.

24

The Company has 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 as well as obtaining the necessary funding. This expansion became necessary following requests by commercial partners to increase manufacturing capacity and provide solvent film manufacturing capabilities. The new facility should create a fivefold 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. The

Company has signed agreements in the amount of €1,911 thousand with six suppliers with respect to equipment for solvent film manufacturing. As at June 30, 2019 an amount of €1,425 thousand has been paid.

Most recent key developments

On April 02, 2019, the Company received a Complete Response Letter from the U.S. Food and Drug Administration regarding its resubmitted 505(b)(2) New Drug Application for RIZAPORT^® VersaFilm™ for the treatment of acute migraines. The issues cited in the CRL relate to the Chemistry, Manufacturing and Controls section of the application. The Agency requested additional information, but no new bioequivalence study.

On April 16, 2019, the Company announced that it had filed a new non-provisional patent application at the United States Patent and Trademark Office entitled "Lipophilic Active Oral Film Formulation And Method Of Making The Same." The patent application covers a newly-developed platform that enables the incorporation of oil-based (lipophilic) active ingredients into oral film formulations. This new platform, suitable for both VersaFilm^TM and VetaFilm^TM, is compatible with several of IntelGenx’ current projects including Montelukast, Loxapine and cannabis-infused films. The technology may also be used when more than one active ingredients, such as THC and CBD, are applied in a single film product.

On April 30, 2019, Andre Godin, IntelGenx’s Executive Vice-President and Chief Financial Officer, presented at the 2019 Bloom Burton & Co. Healthcare Investor Conference at the Metro Toronto

Convention Centre. Mr. Godin provided an overview of IntelGenx’s business during the presentation and was also available to participate in one-on-one meetings with investors registered to attend the conference.

On May 01, 2019, the Company announced that the United States Patent and Trademark Office had issued U.S. Patent 10,272,038 entitled "Film Dosage Form with Extended Release Mucoadhesive Particles." The patent covers the design and manufacturing of topical oral films for the local treatment of diseases of the oral mucosa using mucoadhesive particles. This patent is in the same family as U.S. Patent 9,668,970 – issued to IntelGenx in June 2017 – and provides broader coverage for IntelGenx’s proprietary technology, which is intended to provide sustained release of an active agent to a target area of the oral cavity. The technology is useful for the topical treatment of oral diseases and conditions such as gingivitis, buccal ulcers, canker sores, Sjögren’s syndrome, oral mucositis and Behcet’s disease.

25

On May 08, 2019, the Company announced that it had entered into a definitive worldwide agreement with Aquestive Therapeutics, Inc., a specialty pharmaceutical company focused on developing and commercializing differentiated products to solve therapeutic problems, for the co-development and commercialization of Tadalafil oral films for the treatment of erectile dysfunction. Under the terms of the Agreement, IntelGenx and Aquestive had each granted to the other exclusive worldwide licenses to their respective intellectual property relating to tadalafil oral film formulation and manufacturing. The companies will jointly undertake further co-development and commercialization of Tadalafil oral film products, and will equally share (50/50) net profits from worldwide product sales. In connection with the Agreement, Aquestive had also granted a non-exclusive, royalty bearing U.S. license to any of its intellectual property that may relate to the formulation and manufacturing of IntelGenx’s rizatriptan oral film product, RIZAPORT^®. IntelGenx will pay Aquestive a royalty equal to 10% of all payments received by IntelGenx from third parties for U.S. product related milestones and sales. Aquestive previously submitted new drug application for its tadalafil oral film for the treatment of ED to the U.S. Food and Drug Administration. In November 2018, Aquestive received a complete response letter from the FDA requesting limited additional data from healthy volunteers. Under the terms of the Agreement, both companies will cooperate in responding to the FDA’s CRL.

On May 08, 2019, the Company announced that its Board of Directors appointed André Godin to the position of President in addition to his position as the Company’s Chief Financial Officer. In his newly expanded role, Mr. Godin will have overall responsibility for day-to-day operations, financial reporting and budgeting, as well as managing the Company's relationships and interactions with the investment community. He will continue to report to the Company’s CEO, Dr. Horst G. Zerbe.

On May 28, 2019, the Company provided an update on its cannabis-infused VersaFilm^® product co-development program with Tilray, Inc. IntelGenx stated that they had received the first shipment of cannabis extract from Tilray, providing the Company with sufficient quantities to commence batch production of cannabis-infused VersaFilm^®. This supply of cannabis extract allows the Company to advance development and production of Cannabis-Infused VersaFilm^® products, marking an important milestone for the co-development program. Cannabis-infused VersaFilm^® products are intended to be launched as soon as reasonably possible after the October 17, 2019 implementation deadline for the Government of Canada’s Cannabis Act amendments that will authorize the sale of new classes of cannabis products, including extracts and edibles.

On June 10, 2019, the Company announced the addition of a new Ottawa site in the Montelukast VersaFilm^® Phase 2a BUENA clinical trial in patients with mild to moderate Alzheimer’s Disease.

Finally, on June 19, 2019, the Company announced that, the Kawartha Centre had also agreed to participate in IntelGenx’s Montelukast VersaFilm^® Phase 2a BUENA clinical trial. In addition, IntelGenx was honoured that renowned clinical researcher, Dr. Donald V. Doell, had agreed to serve as the site’s lead investigator.

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 six-month period ended June 30, 2019 report an accumulated other comprehensive loss due to foreign currency translation adjustments of $794 primarily due to the fluctuations in the rates used to prepare our financial statements, $340 of which positively impacted our comprehensive loss for the six-month period ended June 30, 2019. The following Management Discussion and Analysis takes this into consideration whenever material.

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

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 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, from 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				Six-month period
			ended June 30,				ended June 30,
	2019		2018		2019		2018
	$		$		$		$
Comprehensive loss	(2,479	)	(2,432	)	(4,820	)	(4,773	)
Add (deduct):
Depreciation	172		179		343		362
Finance costs	298		277		596		520
Finance income	(32	)	-		(61	)	-
Share-based compensation	95		73		181		123
Other comprehensive loss (income)	(125	)	31		(372	)	108
Adjusted EBITDA	(2,071	)	(1,872	)	(4,133	)	((3,660	)

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

Adjusted EBITDA decreased by $199 for the three-month period ended June 30, 2019 to ($2,071) compared to ($1,872) for the three-month period ended June 30, 2018. The decrease in Adjusted EBITDA of $199 for the three-month period ended June 30, 2019 is mainly attributable to a decrease in revenues of $37, an increase in R&D expenses of $317 before consideration of stock-based compensation offset by a decrease in SG&A expenses of $159 before consideration of stock-based compensation. Adjusted EBITDA decreased by $473 for the six-month period ended June 30, 2019 to ($4,133) compared to ($3,660) for the six-month period ended June 30, 2019. The decrease in Adjusted EBITDA of $473 for the six-month period ended June 30, 2019 is mainly attributable to an increase in R&D expenses of $376 before consideration of stock-based compensation and an increase in SG&A expenses of $237 before consideration of stock-based compensation, offset by an increase in revenues of $140.

Results of operations for the three-month and six-month periods ended June 30, 2019 compared with the three-month and six-month periods ended June 30, 2018.

		Three-month period						Six-month period ended
		ended June 30,						June 30,
		2019			2018			2019		2018
Revenue	$	197		$	234		$	613		473
Research and Development Expenses		1,182			857			2,042		1,654
Selling, General and Administrative		1,181			1,322			2,885		2,602
Expenses
Depreciation of tangible assets		172			179			343		362
Operating loss		(2,338	)		(2,124	)		(4,657	)	(4,145	)
Net loss		(2,604	)		(2,401	)		(5,192	)	(4,665	)
Comprehensive loss		(2,479	)		(2,432	)		(4,820	)	(4,773	)

Revenue

Total revenues for the three-month period ended June 30, 2019 amounted to $197, representing a decrease of $37 or 16% compared to $234 for the three-month period ended June 30, 2018. Total revenues for the six-month period ended June 30, 2019 amounted to $613, representing an increase of $140 or 30% compared to $473 for the six-month period ended June 30, 2018. The decrease for the three-month period ended June 30, 2019 compared to the last year’s corresponding period is mainly attributable to a decrease in R&D revenues of $37. The increase for the six-month period ended June 30, 2019 compared to the last year’s corresponding period is mainly attributable to an increase in R&D milestones revenues of $371 offset by a decrease in R&D revenues of $231.

Research and development ("R&D") expenses

R&D expenses for the three-month period ended June 30, 2019 amounted to $1182, representing an increase of $325 or 38%, compared to $857 for the three-month period ended June 30, 2018. R&D expenses for the six-month period ended June 30, 2019 amounted to $2,042, representing an increase of $388 or 23%, compared to $1,654 for the six-month period ended June 30, 2018.

The increase in R&D expenses for the three-month period ended June 30, 2019 is mainly attributable to

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an increase in lab supplies of $180, study costs of $90 as well as an increase in analytical costs of $47. The increase in R&D expenses for the six-month period ended June 30, 2019 is mainly attributable to an increase in analytical costs of $261 and lab supplies of $207, offset by a decrease in study costs of $80.

In the three-month period ended June 30, 2019 we recorded estimated Research and Development Tax Credits of $94, compared with $78 that was recorded in the same period of the previous year. In the six-month period ended June 30, 2019 we recorded estimated Research and Development Tax Credits of $188, compared with $157 that was recorded in the same period of the previous year.

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

SG&A expenses for the three-month period ended June 30, 2019 amounted to $1,181, representing a decrease of $141 or 11%, compared to $1,322 for the three-month period ended June 30, 2018. SG&A expenses for the six-month period ended June 30, 2019 amounted to $2,885 representing an increase of $283 or 11%, compared to $2,602 for the six-month period ended June 30, 2018.

The decrease in SG&A expenses for the three-month period ended June 30, 2019 is mainly attributable to a decrease in salaries and compensation expenses of $240 mainly attributable to DSUs granted to non-employee Directors in Q1 2019 (2018 DSUs were granted and expensed in Q2-2018), professional fees of $42 and manufacturing expenses of $13 offset by the variation of the foreign exchange expense due to depreciation of the CA dollar vs the US currency of $102 and investor relations expenses of $55. The increase in SG&A expenses for the six-month period ended June 30, 2019 is mainly attributable to an increase in the variation of the foreign exchange expense due to the depreciation of the CA dollar vs the US currency of $242, an increase in investor relations expense of $221 and an increase in salaries and compensation expenses of $40, offset by a decrease in professional fees of $190 attributable to the 2018 aborted capital raise as well as the Laboval acquisition which has been terminated, business development expense of $31 and manufacturing expense of $21.

Depreciation of tangible assets

In the three-month period ended June 30, 2019 we recorded an expense of $172 for the depreciation of tangible assets, compared with an expense of $179 for the same period of the previous year. In the six-month period ended June 30, 2019 we recorded an expense of $343 for the depreciation of tangible assets, compared with an expense of $362 for the same period of the previous year.

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

Share-based compensation warrants and share-based payments expense for the three-month period ended June 30, 2019 amounted to $95 compared to $73 for the three-month period ended June 30, 2018. Share-based compensation warrants and share-based payments expense for the six-month period ended June 30, 2019 amounted to $181 compared to $123 for the six-month period ended June 30, 2018.

We expensed approximately $83 in the three-month period ended June 30, 2019 for options granted to our employees in 2016, 2018 and 2019 under the 2016 Stock Option Plan, approximately $Nil for options granted to non-employee directors in 2016 and 2018, and approximately $12 for options granted to a consultant in 2016, compared with $68, $3, and $2, respectively that was expensed in the same period of the previous year.

We expensed approximately $157 in the six-month period ended June 30, 2019 for options granted to our employees in 2016, 2018 and 2019 under the 2016 Stock Option Plan, approximately $Nil for options granted to non-employee directors in 2016 and 2018, and approximately $24 for options granted to a consultant in 2016, compared with $113, $6, and $4, respectively that was expensed in the same period of the previous year.

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There remains approximately $333 in stock-based compensation to be expensed in fiscal 2019 and 2020, of which $273 relates to the issuance of options to our employees and directors during 2016 to 2019 and $60 relates to the issuance of options to a consultant in 2018. 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

								Percentage
		June 30,		December		Increase/		Increase/
		2019		31, 2018		(Decrease)		(Decrease)
Current Assets	$	7,983	$	13,063	$	(5,080	)	(39%	)
Leasehold improvements and Equipment, net		6,374		6,248		126		2%
Security Deposits		737		707		30		4%
Operating lease right-of- use asset		717		-		717		100%
Current Liabilities		2,395		2,722		(327	)	(12%	)
Long-term debt		827		1,140		(313	)	(27%	)
Convertible debentures		5,424		5,047		377		7%
Convertible notes		1,159		1,073		86		8%
Operating lease liability		588		-		588		100%
Capital Stock		1		1		0		0%
Additional Paid-in-Capital		42,250		42,048		202		1%

Going Concern

The Company has financed its operations to date primarily through public offerings of its common stock, convertible debentures, convertible notes, bank loans, royalty, up-front and milestone payments, license fees, proceeds from exercise of warrants and options, research and development revenues and the sale of U.S. royalty on future sales of Forfivo XL®. 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 June 30, 2019, the Company had cash and short-term investments totaling approximately $6,143. 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:

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• 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.
• Initiate oral film manufacturing activities.
• Initiate contract oral film manufacturing activities.

If the Company is unable to raise 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 delay, reduce or eliminate its research and development programs.

The accompanying 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 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.

Current assets

Current assets totaled $7,983 as at June 30, 2019 compared with $13,063 at December 31, 2018. The decrease of $5,080 is mainly attributable to decreases in short-term investments of $3,618, decrease in cash of $1,234, decrease in accounts receivable of $349 and decrease in prepaid expenses of $104, offset by increases in investment tax credits receivable of $209.

Cash

Cash totaled $5,581 as at June 30, 2019 representing a decrease of $1,234 compared with the balance of $6,815 as at December 31, 2018. The decrease in cash on hand relates to net cash used by operating activities of $4,697 and cash used in financing activities of $316, offset by net cash provided investing activities of $3,504.

Accounts receivable

Accounts receivable totaled $466 as at June 30, 2019 representing a decrease of $349 compared with the balance of $815 as at December 31, 2018. The main reason for the decrease is related to the collection in 2019 of revenues accounted for as at December 31, 2018.

Prepaid expenses

As at June 30, 2019 prepaid expenses totaled $358 compared with $462 as of December 31, 2018. The decrease in prepaid expenses is attributable to the advance payment in December 2018 of certain expenses that relate to services to be provided in the remainder of the year.

Investment tax credits receivable

R&D investment tax credits receivable totaled approximately $625 as at June 30, 2019 compared with $416 as at December 31, 2018. The increase is attributable to the accrual estimated and recorded for the first half of 2019.

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Leasehold improvements and equipment

As at June 30, 2019, the net book value of leasehold improvements and equipment amounted to $6,374, compared to $6,248 at December 31, 2018. In the six-month period ended June 30, 2019 additions to assets totaled $211 and mainly comprised of $112 for manufacturing equipment, $70 for leasehold improvements, $14 for computer equipment and $10 for lab and office equipment.

Security deposit

A security deposit in the amount of CAD$300 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 June 30, 2019. Security deposits in the amount of CAD$650 for the term loans and CAD$15 for utilities were also recorded as at June 30, 2019.

Accounts payable and accrued liabilities

Accounts payable and accrued liabilities totaled $1,520 as at June 30, 2019 compared with $2,030 as at December 31, 2018. The decrease is mainly attributable to the payment of R&D related expenses, professional fees and accruals accounted for as at Dec 31, 2018.

Long-term debt

Long-term debt totaled $1,567 as at June 30, 2019 (December 31, 2018 - $1,832). An amount of $1,287 is attributable to term loan from the lender secured by a first ranking movable hypothec on all present and future movable property of the Company and a 50% guarantee by Export Development Canada, a Canadian Crown corporation export credit agency. The reimbursement of the term loan started in September 2015 and should be fully reimbursed by October 2021.

An amount of $280 is attributable to a second loan secured by a second ranking on all present and future property of the Company reimbursable in monthly principal payments starting January 2018 to December 2021.

Convertible debentures

Convertible debentures totaled $5,424 as at June 30, 2019 as compared to $5,047 as at December 31, 2018. The Corporation issued a total aggregate principal amount of CAD$7,600,000 ($5,807,000) of debentures at a price of CAD$1,000 ($764) per debenture in July 2018 and August 2018. The convertible debentures have been recorded as a liability. Total transactions costs in the amount of CAD$1,237,000 ($945,000) were recorded against the liability. The accretion expense for the six-month period ended June 30, 2019 amounts to CAD$213,000 ($160,000) ((CAD$185,000, (145,000) in 2018)). The interest on the convertible debentures as at June 30, 2019 amounts to CAD$303,000 ($227,000) compared to CAD$304,000 ($238,000) for the comparative period in 2018 and is recorded in Financing and interest expense.

Convertible notes

Convertible notes totaled $1,159 as at June 30, 2019 as compared to $1,073 as at December 31, 2018. The convertible notes have been recorded as a liability. Total transactions costs in the amount of $111 thousand were recorded against the liability. The accretion expense for the six-month period ended June 30, 2019 amounts to $86 compared to $22 for the comparative period in 2018. The interest on the convertible notes for the six-month period ended June 30, 2019 amounts to $48 ($14 in 2018) and is recorded in Financing and interest expense.

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Shareholders’ equity

As at June 30, 2019 we had accumulated a deficit of $36,039 compared with an accumulated deficit of $30,896 as at December 31, 2018. Total assets amounted to $15,811 and shareholders’ equity totaled $5,418 as at June 30, 2019, compared with total assets and shareholders’ equity of $20,018 and $9,987 respectively, as at December 31, 2018.

Capital stock

As at June 30, 2019 capital stock amounted to $0.935 (December 31, 2018: $0.935) . 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 $42,250 as at June 30, 2019, as compared to $42,048 as at December 31, 2018. Additional paid in capital increased by $202 from which $21 came from proceeds from exercise of stock options and $181 from stock-based compensation attributable to the amortization of stock options granted to employees and consultants.

Taxation

As at December 31, 2018, the date of our latest annual tax return, we had Canadian and provincial net operating losses of approximately $14,934 (December 31, 2017: $9,560) and $16,498 (December 31, 2017: $10,052) 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 2028 and 2038. A portion of the net operating losses may expire before they can be utilized.

As at December 31, 2018, we had non-refundable tax credits of $1,981 thousand (2017: $1,553 thousand) of which $8 thousand is expiring in 2026, $9 thousand is expiring in 2027, $165 thousand is expiring in 2028, $145 thousand is expiring in 2029, $124 thousand is expiring in 2030, $131 thousand is expiring in 2031, $164 thousand is expiring in 2032 and $109 thousand is expiring in 2033, $83 thousand expiring in 2034, $97 thousand is expiring in 2035, $135 thousand expiring in 2036 and $257 thousand expiring in 2037 and $554 thousand expiring in 2038. We also had undeducted research and development expenses of $10,663 thousand (2017: $7,532 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

		June 30,			June 30,			Increase/		Percentage
		2019			2018			(Decrease)		Increase/
										(Decrease)
Operating Activities	$	(4,697	)	$	(3,701	)	$	(996	)	(27%	)
Financing Activities		(316	)		3,099			(3,415	)	(110%	)
Investing Activities		3,504			1,454			2,050		141%
Cash - end of period		5,581			2,321			3,260		140%

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Statement of cash flows

Net cash used in operating activities was $4,697 for the six-month period ended June 30, 2019, compared to $3,701 for the six-month period ended June 30, 2018. For the six-month period ended June 30, 2019, net cash used by operating activities consisted of a net loss of $5,192 (2018: $4,665) before depreciation, accretion expense, stock-based compensation, DSU expense, interest payable by issuance of common shares and lease expense in the amount of $886 (2018: $1,122) and a decrease in non-cash operating elements of working capital of $391 (2018: $158).

The net cash used in financing activities was $316 for the six-month period ended June 30, 2019, compared to net cash provided from financing activities of $3,099 in the same period of the previous year. The financing activities for the six-month period ended June 30, 2019 are for the repayment of term loans in the amount of $337 offset by proceeds from exercise of stock options in the amount of $21. For the six-month period ended June 30, 2018, an amount of $3,004 derives from the proceeds of a private placement and an amount of $549 derives from proceeds from exercise of warrants and stock options offset by repayment of term loans for an amount of $372 and the transaction costs related to the private placement of $82.

Net cash provided by investing activities amounted to $3,504 for the six-month period ended June 30, 2019 compared to $1,454 in the same period of 2018. The net cash provided by investing activities for the six-month period ended June 30, 2019 relates to the redemption of short-term investments of $5,184 (2018: $1,908), offset by the acquisition of short-term investments of $1,469 (2018: $Nil) and the purchase of leasehold improvements and equipment of $211 (2018: $454).

The balance of cash as at June 30, 2019 amounted to $5,581, compared to $2,321 as at June 30, 2018.

Subsequent Event

On July 9, 2019, IntelGenx terminated the potential acquisition of Laboval. As a result of the termination, the deposit in the amount of $275 CAD ($210) in trust will be forfeited and transferred to Laboval as required under the terms of the LOI.

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.

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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.

35

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: August 8, 2019	By: /s/ Horst G. Zerbe
	------------------------------------
	Horst G. Zerbe
	Chief Executive Officer and
	Director
Date: August 8, 2019	By: /s/ Andre Godin
	------------------------------------
	Andre Godin
	Principal Accounting Officer

36