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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-K

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

For the fiscal year endedDecember 31, 2009

[   ] 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.(Name of small business issuer as specified
in its charter)

|Delaware                                 | 87-0638336         
|---------------------------------------- | -------------------
|(State or other jurisdiction of          | (I.R.S. Employer   
|incorporation or organization)           | Identification No.)
|                                         |                    
|6425 Abrams, Ville Saint Laurent, Quebec | H4S 1X9            
|(Address of principal executive offices) | (Zip Code)         

(514) 331-7440(Registrants telephone
number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
None.

Securities registered pursuant to Section 12(g) of the
Act:Common Stock, $0.00001 par value

Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes
[   ]    No [X]

Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the Act.  Yes [ 
 ]    No [X]

Indicate by check mark 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 has submitted
electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405
of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post
such files). Yes [X]    No [   ]

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrants knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K.

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, and smaller reporting company in Rule 12b-2 of the
Exchange Act. (Check one):

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

Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Act). Yes [   ] No [X]

---

As of June 30, 2009, the aggregate market value of the
registrants voting and non-voting common equity held by non-affiliates of the registrant was $6,238,993 based on the closing price of the registrants
common shares of U.S. $0.59, as reported on the OTC Bulletin Board on that date. Shares of the registrants common
shares held by each officer and director and each person who owns 10% or
more of the outstanding common shares of the registrant have been excluded in
that such persons may be deemed to be affiliates. This determination of
affiliate status is not necessarily a conclusive determination for other
purposes.

Indicate the number of shares outstanding of each of the
registrants classes of common stock, as of the latest practicable date.

|Class                           | Outstanding at March 29, 2010
|------------------------------- | -----------------------------
|Common Stock, $.00001 par value | 33,081,271 shares            

Documents incorporated by reference:None.

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TABLE OF CONTENTS

|               |                                                                                                                           | Page  
|-------------- | ------------------------------------------------------------------------------------------------------------------------- | ------
|PART
      I   |                                                                                                                           |       
|Item
      1.  | Business.                                                                                                                 | 4     
|Item
      1A  | Risk
      Factors.                                                                                                       | 11    
|Item
      2.  | Properties.                                                                                                               | 17    
|Item
      3.  | Legal
      Proceedings.                                                                                                  | 18    
|Item
      4.  | Submission
      of Matters to a Vote of Security Holders.                                                                | 18    
|               |                                                                                                                           |       
|PART
      II  |                                                                                                                           |       
|Item
      5.  | Market
      for Registrants Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities. | 18    
|Item
      6   | Selected
      Financial Data.                                                                                            | 21    
|Item
      7.  | Managements
      Discussion and Analysis of Financial Condition and Results of Operation.                               | 21    
|Item
      8.  | Financial
      Statements and Supplementary Data.                                                                        | 31    
|Item
      9.  | Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure.                         | 31    
|Item
      9A. | Controls
      and Procedures.                                                                                            | 31    
|Item
      9B. | Other
      Information.                                                                                                  | 32    
|               |                                                                                                                           |       
|PART
      III |                                                                                                                           |       
|Item
      10. | Directors,
      Executive Officers, and Corporate Governance.                                                            | 32    
|Item
      11. | Executive
      Compensation.                                                                                             | 37    
|Item
      12. | Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters.               | 40    
|Item
      13. | Certain
      Relationships and Related Transactions, and Director Independence.                                          | 41    
|Item
      14. | Principal
      Accountant Fees and Services.                                                                             | 41    
|               |                                                                                                                           |       
|PART
      IV  |                                                                                                                           |       
|Item
      15. | Exhibits                                                                                                                  | 42    
|               | Financial
      Statements Schedules.                                                                                     | F1-F30

Terminology and references

In this Annual Report on Form 10-K, the words Company,
IntelGenx, we, us, and our, refer collectively to IntelGenx Technologies
Corp. and IntelGenx Corp., our wholly-owned Canadian subsidiary.

In this Form 10-K, unless otherwise specified, all monetary
amounts are in United States dollars, all references to $, U.S.$, U.S.
dollars and dollars mean U.S. dollars and all references to C$, Canadian
dollars, CDN$ and CAD$ mean Canadian dollars. To the extent that such monetary
amounts are derived from our consolidated financial statements included
elsewhere in this Form 10-K, they have been translated into U.S. dollars in
accordance with our accounting policies as described therein. Unless otherwise
indicated, other Canadian dollar monetary amounts have been translated into
United States dollars at the December 31, 2009 closing rate reported by the Bank
of Canada, being U.S. $1.00 = C$1.0509.

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PART I

Cautionary Statement Concerning Forward-Looking Statements

Certain statements included or incorporated by reference in
this prospectus constitute forward-looking statements within the meaning of
applicable securities laws. All statements contained in this prospectus 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 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 prospective investors should not place undue reliance on the
forward-looking statements. Although the forward-looking statements contained in
this prospectus 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 prospectus or as of
the date specified in the documents incorporated by reference herein, as the
case may be. The Company undertakes 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
listed above in the section captioned "Risk Factors", as well as any cautionary
language in this prospectus, provide examples of risks, uncertainties and events
that may cause IntelGenx's actual results to differ materially from the
expectations IntelGenx describes 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 prospectus could have a
material adverse effect on our business, operating results and financial
condition.

Item 1. Business.

Corporate History

Our predecessor company, Big Flash Corp., was incorporated in
Delaware on July 27, 1999. On April 28, 2006, Big Flash, through its Canadian
holding corporation, completed the acquisition of IntelGenx Corp., a Canadian
company incorporated on June 15, 2003. The Company did not have any operations
prior to the acquisition of IntelGenx Corp. In connection with the acquisition,
we changed our name from Big Flash Corp. to IntelGenx Technologies Corp.
IntelGenx Corp. has continued operations as our operating subsidiary.

Overview

We are a drug delivery company focusing on the development of
novel, orally administered drug delivery products based on our proprietary oral
drug delivery technologies. We have positioned ourselves as a provider of
product development services for the pharmaceutical industry, including the
branded and generic pharmaceutical markets.

Drug delivery systems are an important tool in the hands of
physicians for purposes of optimizing drug therapy. For the pharmaceutical
industry, drug delivery systems represent an opportunity to extend the market
exclusivity and product lifecycle of drugs whose patent protection is nearing
expiration.

Controlled release (CR) dosage technologies play an important
role in the development of orally administered drug delivery systems. Controlled
release technology provides patients with the required amount of medication over
a pre-determined, prolonged period of time. Because of the reduced fluctuation
of the active drug in the blood and the avoidance of plasma spikes, controlled
release products are deemed safer and more tolerable than conventional dosage
forms, and have shown better patient compliance.

Our primary business strategy is to develop pharmaceutical
products based upon our proprietary drug delivery technologies and license the
commercial rights to companies in the pharmaceutical industry once the viability
of a product has been demonstrated. In exchange for licensing rights to our
products, we seek funding consisting of a combination of one or more of the
following: advance down payments, milestone fees, reimbursement for development
costs, and royalties on sales. In addition, we may receive a manufacturing
royalty from our contract manufacturers for the exclusive right to manufacture
our products. The companies we partner with are typically responsible for
managing the regulatory approval process of the product with the United States
Food and Drug Administration (FDA) and/or other regulatory bodies, as well as
for the marketing and distribution of the products. On a case-by-case basis,
IntelGenx may be responsible for providing all or part of the documentation
required for the regulatory submission. In addition to pursuing partnering
arrangements that provide for the full funding of a drug development project, we
may undertake development of selected product opportunities until the marketing
and distribution stage. We would first assess the potential and associated costs
for successful development of a product, and then determine at which stage it
would be most prudent to seek a partner, balancing costs against the potential
for higher returns later in the development process.

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Technology Platforms

Our product development efforts are based upon three delivery
platform technologies: (1) a Multilayer Tablet technology (2) an Oral Film
technology, and (3) a Mucoadhesive Tablet technology. Our Multilayer Tablet
platform technology allows for the development of oral controlled-release
products. It is designed to be versatile and to reduce manufacturing costs as
compared to competing oral extended-release delivery technologies. The Oral Film
technology allows for the instant delivery of pharmaceuticals to the oral
cavity, while the Mucoadhesive Tablet allows for the controlled release of
active substances to the oral mucosa.

The Multilayer Tablet (VersaTab) platform technology
represents a new generation of controlled release layered tablets designed to
modulate the release of active compounds. The technology is based on a
multilayer tablet with an active core layer and erodible cover layers. The
release of the active drug from the core matrix initially occurs in a
first-order fashion. As the cover layers start to erode, their permeability for
the active ingredient through the cover layers increases. Thus, the Multilayer
Tablet can produce quasi-linear (zero-order) kinetics for releasing a chemical
compound over a desired period of time. The erosion rate of the cover layers can
be customized according to the physico-chemical properties of the active drug.
In addition, our multilayer technology offers the opportunity to develop
combination products in a regulatory-compliant format. Combination products are
made up of two or more active ingredients that are combined into a single dosage
form.

The Oral Film technology (VersaFilm) is made up of a thin
(25-35 micron) polymeric film comprised of USP components that are approved by
the FDA for use in food, pharmaceutical, and cosmetic products. Derived from the
edible film technology used for breath strips and initially developed for the
instant delivery of savory flavors to food substrates, the VersaFilm technology
is designed to provide a rapid response relative to existing fast dissolving
oral tablets. The VersaFilm technology is intended for indications requiring
rapid onset of action, such as migraine, motion sickness, erectile dysfunction,
and nausea.

The Mucoadhesive Tablet (AdVersa) is a drug delivery system
capable of adhering to the oral mucosa and releasing the drug onto the site of
application at a controlled rate. The Mucoadhesive Tablet is designed to provide
the following advantages relative to competing technologies: (i) it avoids the
first pass effect, whereby the liver metabolizes the active ingredient and
greatly reduces the level of drug in the systemic circulation, (ii) it leads to
a higher absorption rate as compared to the conventional oral route, and (iii)
it achieves a rapid onset of action for the drug. The Mucoadhesive Tablet
technology is designed to be versatile in order to permit the site of
application, residence time, and rate of release of the drug to be modulated to
achieve the desired results.

Product Portfolio

Our product portfolio includes a blend of generic and branded
products based on our proprietary delivery technology (generic drugs are
essentially copies of drugs that have already received FDA approval).

INT0001/2004. This is the most advanced generic product
involving our trilayer technology. Equivalency with the reference product Toprol
XL and its European equivalent Beloc-ZOK has been demonstrated in-vitro.
The product has been tested in phase I studies.

INT0003/2005. We have entered into a partnership with Cary
Pharmaceuticals for the development of a once-daily tablet product containing an
antidepressant and a nicotine antagonist. The product is intended for smoking
cessation.

INT0004/2006. The development of a new strength antidepressant
Bupropion HCl, the active ingredient in Wellbutrin XL® has been completed. A
regulatory file for a 505(b)(2) NDA submission was filed in April, 2009. In a
complete response letter received on February 4, 2010, the FDA commented on the
food effect which was observed in the food effect study included in the NDA and
on the lack of a commercial manufacturer. Both issues will be
addressed in an amendment to the NDA which the Company intends to file in the
second half of 2010.

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INT0005/2005. We are developing a bilayer tablet containing a
fixed-dose combination of a non-steroidal anti-inflammatory drug and a synthetic
prostaglandin. Formulation development is completed and a pilot bio batch has
been manufactured.

INT0006/2005. We have entered into a development agreement with
Azur Pharma for the development and manufacture of a prenatal vitamin
supplement. The product was developed using our proprietary technology. The
product was launched in the United States during the fourth quarter of 2008
under the brand name Gesticare®.

INT0010/2006. We have entered into an agreement with Cannasat
Therapeutics Inc. for the development of a buccal mucoadhesive tablet product
containing a cannabinoid-based drug for the treatment of neuropathic pain and
nausea in cancer patients undergoing chemotherapy.

INT0014/2008. Under a development agreement with Cannasat
Therapeutics Inc., we are developing a controlled-release tablet containing
Cannabidiol for the treatment of schizophrenia. The limited financial resources
of our partner in this project have resulted in the project being put on
hold.

INT0007/2006. An oral film product based on our proprietary
edible film technology is currently in the early development stage. The product
is intended for the treatment of erectile dysfunction (ED). A phase I pilot
biostudy was completed.

INT0008/2007. An oral film product based on our proprietary
edible film technology is currently in development. The product is intended for
the treatment of migraine. The results of a phase I pilot study that was
conducted in 2009 indicate that the product is bioequivalent with the reference
listed drug.

INT0015/2008. An oral film product based on our proprietary
edible film technology is currently in the early development stage. The product
is intended for the treatment of panic attacks.

INT0018/2008. We have entered into a development and licensing
agreement with Circ Pharma Ltd. to formulate, manufacture and supply a novel
drug product, based upon our proprietary VersaTab technology, for the treatment
of hyperlipidemia. The product is currently in the early development stage but
has temporarily been put on hold by our development partner.

INT0019/2009. An oral film product based on our proprietary
edible film technology is currently in the early development stage. The product
is intended for the treatment of diarrhea.

The current development status of each of our products as of
the date of this filing is summarized in the following table:

Product
    Application
    Status of DevelopmentINT0001/2004
      CHF [Coronary Heart Failure], Hypertension
      Pivotal batches in preparationINT0003/2005
    Smoking cessation
    Pilot biostudy completedINT0004/2006
      Antidepressant
      NDA filed April, 2009; complete response letter
        received Q1/2010INT0010/2006
    Neuropathic pain
    Pilot biostudy completedINT0006/2005
      Prenatal vitamin supplement
      Product launched in USA Q4, 2008INT0005/2005
    Osteoarthritis
    Pilot batch completed


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INT0007/2006
      ED
      Formulation development ongoingINT0008/2007
      Migraine
      Pilot biostudy completedINT0014/2008
    Schizophrenia
    Project currently on holdINT0015/2008
    Panic Attack
    Formulation development ongoingINT0018/2008
      Hyperlipidemia
      Project on hold.INT0019/2009
      Diarrhea
      Formulation development ongoing


Growth Strategy

Our primary growth strategies include: (1) identifying
lifecycle management opportunities for existing blockbuster products, (2)
developing generic drugs with high barriers to entry, (3) developing products
for the (non-pharmaceutical) nutritional supplement market, and (4) developing
new drug delivery technologies.

Lifecycle Management Opportunities

We are seeking to position our delivery technologies as an
opportunity for lifecycle management of products for which the 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 three 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 these so-called
505(b)(2) products represent a viable business opportunity for us.

Generic Drugs with High Barriers to Entry

We will also plan to pursue the development of generic drugs
that have certain barriers to entry, e.g., where product development and
manufacturing are 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. An example of such a
product is our project INT0005/2005, a fixed-dose combination medication
requiring complex formulation and manufacturing technology.

Nutritional Supplement Products

We plan to develop additional products for the nutritional
supplement market based upon our proprietary drug delivery technologies. The
market for these supplements is large, with little differentiation between
products. Our proprietary technology is aimed at increasing the absorption rate
of active ingredients. We believe that supplements represent attractive short
term revenue opportunities since they are not regulated as pharmaceutical
products and do not require FDA approval.

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Development of New Drug Delivery Technologies

The rapidly disintegrating film technology contained in our
VersaFilm and our AdVersa mucosal adhesive tablet are 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.

Competition

The pharmaceutical industry is highly competitive and is
subject to the rapid emergence of new technologies, governmental regulations,
healthcare legislation, availability of financing, patent litigation and other
factors. Many of our competitors, including Biovail Corporation, Labopharm Inc.,
and Flamel Technologies S.A., have longer operating histories and greater
financial, technical, marketing, legal and other resources than we have. In
addition, many of our competitors have significantly greater experience than we
have in conducting clinical trials of pharmaceutical products, obtaining FDA and
other regulatory approvals of products, and marketing and selling products that
have been approved. We expect that we will be subject to competition from
numerous other companies that currently operate or are planning to enter the
markets in which we compete.

The key factors affecting the development and commercialization
of our drug delivery products are likely to include, among other factors:

- The safety and efficacy of our products;
- The relative speed with which we can develop products;
- Generic competition for any product that we develop;
- Our ability to defend our existing intellectual property and to broaden our
  intellectual property and technology base;
- Our ability to differentiate our products;
- Our ability to manufacture our products in compliance with current Good
  Manufacturing Practices (cGMP) and any other regulatory requirements; and
- Our ability to obtain financing.

In order to establish ourselves as a viable industry partner,
we plan to continue to invest in our research and development activities in
order to strengthen further our technology base and to develop the ability to
manufacture our products through our manufacturing partner at competitive
costs.

Our Competitive Strengths

We believe that our key competitive strengths include:

- Our intellectual property;
- The versatility of our drug delivery technology; and
- The potential manufacturing cost savings associated with our technology.

Manufacturing Partnership / Strategy

We manufacture products only for testing purposes in our own
laboratories, and we do not manufacture products for clinical trials or for
commercial use. We do not own manufacturing facilities for commercial production
and we have no plans to acquire such facilities in the near future. Our strategy
is to secure partnerships with specialist manufacturing companies that are able
to offer reliable, high quality manufacturing services at cost effective
pricing.

We formed a strategic alliance with LTS Lohmann
Therapie-Systeme AG ("LTS") for the exclusive manufacturing of products
developed by us using our VersaFilm drug delivery technology. LTS is regarded as
a pioneer in the development and production of transdermal and film form/wafer oral systems and has become one
of the world's leading suppliers for the international pharmaceutical industry.
VersaFilm is IntelGenx's immediate release wafer technology. It is comprised of
a thin polymeric film using United States Pharmacopeia (USP) components that are
safe and approved by the FDA for use in food, pharmaceutical and cosmetic
products. VersaFilm provides a patent-protected method of re-formulating
approved pharmaceuticals in a more convenient and discrete oral dosage form.

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We are currently in negotiations to secure a manufacturing
partnership for the productions of clinical test batches and commercial product
for our VersaTab and AdVersa tablet products.

We are not a manufacturer and we do not usually purchase large
quantities of raw materials. Our manufacturing partners, however, purchase
significant quantities of raw materials, some of which may have long lead times.
If raw materials cannot be supplied to our manufacturing partners in a timely
and cost effective manner, our manufacturing partners may experience delays in
production that may lead to reduced supplies of commercial product being
available for sale or distribution. Such shortages could have a detrimental
effect on sales of the product and a corresponding reduction on royalty revenues
earned.

Dependence on Major Customers

We do not rely on any one or a few major customers for our end
products. However, we depend upon a limited number of partners to develop our
products, to provide funding for the development of our products, and to assist
in obtaining regulatory approvals that are required in order to commercialize
these products.

Intellectual Property and Patent Protection

We protect our intellectual property and technology by using
the following methods: (i) applying for patent protection in the United States
and in the appropriate foreign markets, (ii) non-disclosure agreements, license
agreements and appropriate contractual restrictions and controls on the
distribution of information, and (iii) trade secrets, common law trademark
rights and trademark registrations. We plan to file core technology patents
covering the use of our platform technologies in any pharmaceutical products.

We have obtained four (4) patents and have an additional seven
(7) pending patent applications, as described below. The patents expire 20 years
after submission of the initial application.

Patent No.
    Title
    Subject
    Date submitted / issuedUS 6,231,957
    Rapidly disintegrating flavor wafer for
      flavor enrichment
    The composition, manufacturing, and
      use of rapidly disintegrating flavored films for releasing flavors to
      certain substrates
    Issued May 15, 2001US 6,660,292
    Rapidly disintegrating film for
      precooked foods
    Composition and manufacturing of
      flavored films for releasing flavors to precooked food substrates
    Issued December 9, 2003US 7,132,113
    Flavored film
    Composition and manufacturing method
      of multi-layered films
    Issued April 16, 2002US Appl. 2007/0190144
    Multilayer Tablet
    Formulation and Method of Preparation
      of Multilayered Tablets
    Published August 16, 2007


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US Appl. 2007/0128272
    Multi-Vitamin And Mineral Supplement
    Formulation and Method of Preparation
      of Prenatal Multivitamin Supplement
    Published June 7, 2007PCT/CA2006/000336; US Appl.
      11/403,262
    Delayed Release Oral Dosage Form And
      Method Of Making Same
    Formulation and Method Of Making
      Bilayer Tablets Containing Delayed-Release Diclofenac And Misoprostol
    February 13, 2006US Appl. 11/782,838
      PCT/IB2007/03950
    Controlled Release Pharmaceutical
      Tablets
    Formulation and Method Of Making
      Tablets Containing Bupropion And Mecamylamine
    July 2006US Patent 7674479
    Sustained-release Bupropion and
      Bupropion / Mecamylamine tablets
    Formulation and Method Of Making
      Tablets Containing Bupropion And Mecamylamine
    Issued March 9, 2010US Provisional Appl. US 61/230504
    Dosage forms of complexed
      cannabinoids
    Formulation and Method of Preparation
      of gamma- cyclodextrin complexes containing cannabinoids
    August 2009US Provisional Appl. US 61/267626
    Oral film dosage forms and methods
      for making same
    Optimization of Film strip technology
    December 2009


Government Regulation

The pharmaceutical industry is highly regulated. The products
we participate in developing require certain regulatory approvals. In the United
States, drugs are subject to rigorous regulation by the FDA. The U.S. Federal
Food, Drug, and Cosmetic Act, and other federal and state statutes and
regulations, govern, among other things, the research, development, testing,
manufacture, storage, record keeping, packaging, labeling, adverse event
reporting, advertising, promotion, marketing, distribution, and import and
export of pharmaceutical products. Failure to comply with applicable regulatory
requirements may subject a company to a variety of administrative or
judicially-imposed sanctions and/or the inability to obtain or maintain required
approvals or to market drugs. The steps ordinarily required before a new
pharmaceutical product may be marketed in the United States include:

- preclinical laboratory tests, animal studies and formulation studies under
  FDAs good laboratory practices regulations, or GLPs;
- the submission to the FDA of an investigational new drug application, or
  IND, which must become effective before human clinical trials may begin;
- the completion of adequate and well-controlled clinical trials according
  to good clinical practice regulations, or GCPs, to establish the safety and
  efficacy of the product for each indication for which approval is sought;
- After successful completion of the required clinical testing, submission
  to the FDA of a New Drug Application, or NDA, or an Abbreviated New Drug
  Application, or ANDA, for generic drugs. In certain cases, an application for
  marketing approval may include information regarding safety and efficacy of a
  proposed drug that comes from studies not conducted by or for the applicant.
  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.

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- satisfactory completion of an FDA inspection of the manufacturing facility
  or facilities at which the product is produced to assess compliance with cGMPs
  to assure that the facilities, methods and controls are adequate to preserve
  the drugs identity, strength, quality and purity; and
- FDA review and approval of the NDA or ANDA.

The cost of complying with the foregoing requirements,
including preparing and submitting an NDA or ANDA, may be substantial.

Accordingly, we typically rely upon our partners in the
pharmaceutical industry to spearhead and bear the costs of the FDA approval
process. We also seek to mitigate regulatory costs by focusing on 505(b)(2) NDA
opportunities. By applying our drug delivery technology to existing drugs, we
seek to develop products with lower Research & Development (R&D)
expenses and shorter time-to-market timelines as compared to regular NDA
products.

Research and Development Expense

Our R&D expenses, net of R&D tax credits, for the year
ended December 31, 2009 decreased significantly to $1,237.1 thousand as compared
to $1,779.7 thousand for the year ended December 31, 2008.

Environmental Regulatory Compliance

We believe that we are in compliance with environmental
regulations applicable to our research and development facility located in Ville
Saint-Laurent, Quebec.

Employees

As of the date of this filing, we have 9 full time employees.

Item 1A. Risk Factors.

An investment in our common stock involves significant
risks. You should carefully consider the following risks and all other
information set forth in this prospectus before deciding to invest in shares of
our common stock. If any of the events or developments described below occurs,
our business, financial condition and results of operations may suffer. In that
case, the value of our common stock may decline and you could lose all or part
of your investment.

Risks Related to Our Business

We continue to sustain losses and our revenues are not
sufficient to sustain our operations.

Even though we ceased being a development stage company in
April 2006, we are still subject to all of the risks associated with having a
limited operating history and pursuing the development of new products. Our cash
flows may be insufficient to meet expenses relating to our operations and the
development of our business, and may be insufficient to allow us to develop new
products. We currently conduct research and development using our proprietary
platform technologies to develop oral controlled release and other delivery
products. We do not know whether we will be successful in the development of
such products. We have an accumulated deficit of approximately $6,665.4 thousand
since our inception in 2003 through December 31, 2009. To date, these losses
have been financed principally through sales of equity securities, long-term
debt and debt from related parties. Our revenues for the years ended December
31, 2009, December 31, 2008, December 31, 2007, December 31, 2006, December 31,
2005 and December 31, 2004 were $1,278.7 thousand, $976.6 thousand, $862.7
thousand, $265.9 thousand, $20.0 thousand and $257.4 thousand respectively. Our
revenues in 2009 consisted primarily of development fee revenues from four
clients, and royalty income earned from commercialization of the first product
fully-developed by the Company, a prenatal multivitamin supplement marketed as
Gesticare® in the USA, which was commercialized in November 2008. Revenue
generated to date has not been sufficient to sustain our operations. In order to
achieve profitability, our revenue streams will have to increase and there is no
assurance that revenues will increase to such a level.

We may incur losses associated with foreign currency
fluctuations.

The majority of our expenses are paid in Canadian dollars,
while a significant portion of our revenues are in U.S. dollars. Our financial
results are subject to the impact of currency exchange rate fluctuations.
Adverse movements in exchange rates could have a material adverse effect on our
financial condition and results of operations.

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We may need additional capital to fulfill our business
strategies. We may also incur unforeseen costs. Failure to obtain such capital
would adversely affect our business.

We will need to expend significant capital in order to continue
with our research and development by hiring additional research staff and
acquiring additional equipment. If our cash flows from operations are
insufficient to fund our expected capital needs, or our needs are greater than
anticipated, we will be required to raise additional funds in the future through
private or public sales of equity securities or the incurrence of additional
indebtedness. Additional funding may not be available on favorable terms, or at
all. If we borrow additional funds, we likely will be obligated to make periodic
interest or other debt service payments and may be subject to additional
restrictive covenants. If we fail to obtain sufficient additional capital in the
future, we could be forced to curtail our growth strategy by reducing or
delaying capital expenditures, selling assets or downsizing or restructuring our
operations. If we raise additional funds through public or private sales of
equity securities, the sales may be at prices below the market price of our
stock and our shareholders may suffer significant dilution.

The loss of the services of key personnel would adversely
affect our business.

Our future success depends to a significant degree on the
skills, experience and efforts of our executive officers and senior management
staff. The loss of the services of existing personnel, particularly Horst Zerbe,
our Chairman of the Board and Chief Executive Officer, would be detrimental to
our research and development programs and to our overall business.

We are dependent on business partners to conduct clinical
trials of, obtain regulatory approvals for, and manufacture, market, and sell
our controlled release products.

We depend heavily on our pharmaceutical partners to pay for
part or all of the research and development expenses associated with developing
a new product and to obtain approval from regulatory bodies such as the U.S.
Food and Drug Administration (the FDA) to commercialize these products. We
also depend on our partners to distribute these products after receiving
regulatory approval. Our revenues from research and development fees, milestone
payments and royalty fees are provided by our partners. Our inability to find
pharmaceutical partners who are willing to pay us these fees in order to develop
new products would negatively impact our business and our cash flows.

We have limited experience in manufacturing, marketing and
selling pharmaceutical products. Accordingly, if we cannot maintain our existing
partnerships or establish new partnerships with respect to our other products in
development, we will have to establish our own capabilities or discontinue the
commercialization of the affected product. Developing our own capabilities would
be expensive and time consuming and could delay the commercialization of the
affected product. There can be no assurance that we would be able to develop
these capabilities.

Our existing agreements with pharmaceutical industry partners
are generally subject to termination by the counterparty on short notice upon
the occurrence of certain circumstances, including but not limited to the
following: a determination that the product in development is not likely to be
successfully developed or not likely to receive regulatory approval; our failure
to satisfy our obligations under the agreement, or the occurrence of a
bankruptcy event. If any of our partnerships are terminated, we may be required
to devote additional resources to the product, seek a new partner on short
notice, or abandon the product development efforts. The terms of any additional
partnerships or other arrangements that we establish may not be favorable to us.

We are also at risk that these partnerships or other
arrangements may not be successful. Factors that may affect the success of our
partnerships include the following: Our partners may incur financial and
cash-flow difficulties that force them to limit or reduce their participation in
our joint projects.

- Our partners may be pursuing alternative technologies or developing
  alternative products that are competitive to our product, either on their own
  or in partnership with others;
- Our partners may reduce marketing or sales efforts, or discontinue
  marketing or sales of our products. This would reduce our revenues received on
  the products;
- Our partners may terminate their partnerships with us. This could make it
  difficult for us to attract new partners or adversely affect perception of us
  in the business and financial communities; and
- Our partners may pursue higher priority programs or change the focus of
  their development programs, which could affect the partners commitment to us.
  Pharmaceutical and biotechnology companies historically have re-evaluated
  their priorities from time to time, including following mergers and
  consolidations, a common occurrence in recent years.

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- Our partners may incur financial and cash-flow difficulties that force
  them to limit or reduce their participation in our development projects
- Our partners may become the target of litigation for purported patent or
  intellectual property infringement, which could delay or prohibit
  commercialization of our products and which would reduce our revenue from such
  products.

We face competition in our industry, and many of our
competitors have substantially greater experience and resources than we do.

We compete with other companies within the drug delivery
industry, many of which have more capital, more extensive research and
development capabilities and greater human resources than we do. Some of these
drug delivery competitors include Biovail Corporation, Labopharm Inc., and
Flamel Technologies S.A. Our competitors may develop new or enhanced products or
processes that may be more effective, less expensive, safer or more readily
available than any products or processes that we develop, or they may develop
proprietary positions that prevent us from being able to successfully
commercialize new products or processes that we develop. As a result, our
products or processes may not compete successfully, and research and development
by others may render our products or processes obsolete or uneconomical.
Competition may increase as technological advances are made and commercial
applications broaden.

We are dependent upon sales outside the United States, which
are subject to a number of risks.

Our future results of operation could be harmed by risks
inherent in doing business in international markets, including:

- Unforeseen changes in regulatory requirements;
- Weaker intellectual property rights protection in some countries;
- New export license requirements, changes in tariffs or trade restrictions;
  and
- Political and economic instability in our target markets.

We rely upon third-party manufacturers, which puts us at
risk for supplier business interruptions.

We have entered into agreements with third party manufacturers
to manufacture certain of our products once we complete development and after we
receive regulatory approval. If our third-party manufacturers fail to perform,
our ability to market products and to generate revenue would be adversely
affected. Our failure to deliver products in a timely manner could lead to the
dissatisfaction of our distribution partners and damage our reputation, causing
our distribution partners to cancel existing agreements with us and to stop
doing business with us.

The third-party manufacturers that we depend on to manufacture
our products are required to adhere to FDA regulations regarding cGMP, which
include testing, control and documentation requirements. Ongoing compliance with
cGMP and other regulatory requirements is monitored by periodic inspection by
the FDA and comparable agencies in other countries. Failure by our third-party
manufacturers to comply with cGMP and other regulatory requirements could result
in actions against them by regulatory agencies and jeopardize our ability to
obtain products on a timely basis.

We are subject to extensive government regulation including
the requirement of approval before our products may be marketed. Even if we
obtain marketing approval, our products will be subject to ongoing regulatory
review.

We, our partners, our products, and our product candidates are
subject to extensive regulation by governmental authorities in the United States
and other countries. Failure to comply with applicable requirements could result
in warning letters, fines and other civil penalties, delays in approving or
refusal to approve a product candidate, product recall or seizure, withdrawal of
product approvals, interruption of manufacturing or clinical trials, operating
restrictions, injunctions, and criminal prosecution.

Our products cannot be marketed in the United States without
FDA approval. Obtaining FDA approval requires substantial time, effort, and
financial resources, and there can be no assurance that any approval will be
granted on a timely basis, if at all. We rely on our partners for the
preparation of applications and for obtaining regulatory approvals. If the FDA
does not approve our product candidates in a timely fashion, or does not approve
them at all, our business and financial condition may be adversely affected.

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Further, the terms of approval of any marketing application,
including the labeling content, may be more restrictive than we desire and could
affect the marketability of our or our collaborator's products. Subsequent
discovery of problems with an approved product may result in restrictions on the
product or its withdrawal from the market. In addition, both before and after
regulatory approval, we, our collaborators, our products, and our product
candidates are subject to numerous FDA requirements covering testing,
manufacturing, quality control, cGMP, adverse event reporting, labeling,
advertising, promotion, distribution, and export. Our partners and we are
subject to surveillance and periodic inspections to ascertain compliance with
these regulations. Further, the relevant law and regulations may change in ways
that could affect us, our partners, our products, and our product candidates.
Failure to comply with regulatory requirements could have a material adverse
impact on our business.

Regulations regarding the manufacture and sale of our future
products are subject to change. We cannot predict what impact, if any, such
changes may have on our business, financial condition or results of operations.
Failure to comply with applicable regulatory requirements could have a material
adverse effect on our business, financial condition and results of operations.

Additionally, the time required for obtaining regulatory
approval is uncertain. We may encounter delays or product rejections based upon
changes in FDA policies, including cGMP, during periods of product development.
We may encounter similar delays in countries outside of the United States. We
may not be able to obtain these regulatory acceptances on a timely basis, or at
all.

The failure to obtain timely regulatory acceptance of our
products, any product marketing limitations, or any product withdrawal would
have a material adverse effect on our business, financial condition and results
of operations. In addition, before it grants approvals, the FDA or any foreign
regulatory authority may impose numerous other requirements with which we must
comply. Regulatory acceptance, if granted, may include significant limitations
on the indicated uses for which the product may be marketed. FDA enforcement
policy strictly prohibits the marketing of accepted products for unapproved
uses. Product acceptance could be withdrawn or civil or criminal sanctions could
be imposed for our failure to comply with regulatory standards or the occurrence
of unforeseen problems following initial marketing.

The third party manufacturers that we depend on to manufacture
our products are required to adhere to FDA regulations regarding cGMP and
similar regulations in other countries, which include testing, control and
documentation requirements. Ongoing compliance with cGMP and other regulatory
requirements is monitored by periodic inspection by the FDA and comparable
agencies in other countries.

We may not be able to expand or enhance our existing product
lines with new products limiting our ability to grow.

If we are not successful in the development and introduction of
new products, our ability to grow will be impeded. We may not be able to
identify products to enhance or expand our product lines. Even if we can
identify potential products, our investment in research and development might be
significant before we could bring the products to market. Moreover, even if we
identify a potential product and expend significant dollars on development, we
may never be able to bring the product to market or achieve market acceptance
for such product. As a result, we may never recover our expenses.

The market may not be receptive to products incorporating
our drug delivery technologies.

The commercial success of any of our products that are approved
for marketing by the FDA and other regulatory authorities will depend upon their
acceptance by the medical community and third party payers as clinically useful,
cost-effective and safe. To date, only one product based upon our technologies
has been marketed in the United States, which limits our ability to provide
guidance or assurance as to market acceptance.

Factors that we believe could materially affect market
acceptance of these products include:

- the timing of the receipt of marketing approvals and the countries in which
  such approvals are obtained;
- the safety and efficacy of the product as compared to competitive products;
- the relative convenience and ease of administration as compared to
  competitive products;
- the strength of marketing distribution support; and
- the cost-effectiveness of the product and the ability to receive third
  party reimbursement.

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We are subject to environmental regulations and any failure
to comply may result in substantial fines and sanctions.

Our operations are subject to Canadian and international
environmental laws and regulations governing, among other things, emissions to
air, discharges to waters and the generation, handling, storage, transportation,
treatment and disposal of raw materials, waste and other materials. Many of
these laws and regulations provide for substantial fines and criminal sanctions
for violations. We believe that we are and have been operating our business and
facility in a manner that complies in all material respects with environmental,
health and safety laws and regulations; however, we may incur material costs or
liabilities if we fail to operate in full compliance. We do not maintain
environmental damage insurance coverage with respect to the products which we
manufacture.

We may have to make significant expenditures in the future to
comply with evolving environmental, health and safety requirements, including
new requirements that may be adopted or imposed in the future. To meet changing
licensing and regulatory standards, we may have to make significant additional
site or operational modifications that could involve substantial expenditures or
reduction or suspension of some of our operations. We cannot be certain that we
have identified all environmental and health and safety matters affecting our
activities and in the future our environmental, health and safety problems, and
the costs to remediate them, may be materially greater than we expect.

Our limited cash resources restrict our ability to pay cash
dividends.

Since our inception, we have not paid any cash dividends on our
common stock. We currently intend to retain future earnings, if any, to support
operations and to finance the growth and development of our business. Therefore,
we do not expect to pay cash dividends in the foreseeable future. Any future
determination relating to our dividend policy will be made at the discretion of
our Board of Directors and will depend on a number of factors, including future
earnings, capital requirements, financial conditions and future prospect and
other factors that the board of directors may deem relevant. If we do not pay
any dividends on our common stock, our stockholders will be able to profit from
an investment only if the price of the stock appreciates before the stockholder
sells it. Investors seeking cash dividends should not purchase our common
stock.

Risks Related to Our Intellectual Property

If we are not able to adequately protect our intellectual
property, we may not be able to compete effectively.

Our success depends, to a significant degree, upon the
protection of our proprietary technologies. While we currently own four U.S.
patents and have applied for seven U.S. patents, we will need to pursue
additional protection for our intellectual property as we develop new products
and enhance existing products. We may not be able to obtain appropriate
protection for our intellectual property in a timely manner, or at all. Our
inability to obtain appropriate protections for our intellectual property may
allow competitors to enter our markets and produce or sell the same or similar
products.

If we are forced to resort to legal proceedings to enforce our
intellectual property rights, the proceedings could be burdensome and expensive.
In addition, our proprietary rights could be at risk if we are unsuccessful in,
or cannot afford to pursue, those proceedings.

We also rely on trade secrets and contract law to protect some
of our proprietary technology. We have entered into confidentiality and
invention agreements with our employees and consultants. Nevertheless, these
agreements may not be honored and they may not effectively protect our right to
our un-patented trade secrets and know-how. Moreover, others may independently
develop substantially equivalent proprietary information and techniques or
otherwise gain access to our trade secrets and know-how.

In 1995, the U.S. Patent and Trademark Office adopted changes
to the U.S. patent law that made the term of issued patents 20 years from the
date of filing rather than 17 years from the date of issuance, subject to
specified transition periods. Beginning in June 1995, the patent term became 20
years from the earliest effective filing date of the underlying patent
application. These changes may reduce the effective term of protection for
patents that are pending for more than three years. While we cannot predict the
effect that these changes will have on our business, they could have a material
adverse effect on our ability to protect our proprietary information.
Furthermore, the possibility of extensive delays in the patent issuance process
could effectively reduce the term during which a marketed product is protected
by patents.

We may need to obtain licenses to patents or other proprietary
rights from third parties. We may not be able to obtain the licenses required
under any patents or proprietary rights or they may not be available on
acceptable terms. If we do not obtain required licenses, we may encounter delays
in product development or find that the development, manufacture or sale of
products requiring licenses could be foreclosed. We may, from time to time,
support and collaborate in research conducted by universities and governmental
research organizations. We may not be able to acquire exclusive rights to the
inventions or technical information derived from these collaborations, and
disputes may arise over rights in derivative or related research programs
conducted by us or our collaborators.

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If we infringe on the rights of third parties, we may not be
able to sell our products, and we may have to defend against litigation and pay
damages.

If a competitor were to assert that our products infringe on
its patent or other intellectual property rights, we could incur substantial
litigation costs and be forced to pay substantial damages. Such litigation costs
could be as a result of direct litigation against us, or as a result of
litigation against one or more of our partners to whom we have contractually
agreed to indemnify in the event that our intellectual property is the cause of
a successful litigious action against our partner. Third-party infringement
claims, regardless of their outcome, would not only consume significant
financial resources, but would also divert our managements time and attention.
Such claims could also cause our customers or potential customers to purchase
competitors products or defer or limit their purchase or use of our affected
products until resolution of the claim. If any of our products are found to
violate third-party intellectual property rights, we may have to re-engineer one
or more of our products, or we may have to obtain licenses from third parties to
continue offering our products without substantial re-engineering. Our efforts
to re-engineer or obtain licenses could require significant expenditures and may
not be successful.

We may not be successful in defending the lawsuit filed by
Biovail Laboratories SLR against us and may have to reimburse certain legal
expenses and damages awarded.

While we believe that the lawsuit filed by Biovail Laboratories
SLR (Biovail), which holds the patent for Wellbutrin XL®, against our
development partner Cary Pharmaceuticals Inc. (Cary Pharma), in the U.S.
District Court for the District of Delaware for patent infringement under the
provisions of the Drug Price Competition and Patent Term Restoration Act of
1984, is without foundation or merit, if Biovail is successful in its action
against Cary Pharma, we may have to reimburse Cary Pharmas legal expense and/or
any damages awarded.

Our controlled release products that are generic versions of
branded controlled release products that are covered by one or more patents may
be subject to litigation, which could delay FDA approval and commercial launch
of our products

We expect to file or have our collaborators file Abbreviated
New Drug Applications or New Drug Applications (ANDAs or NDAs) for our
controlled release products under development that are covered by one or more
patents of the branded product. It is likely that the owners of the patents
covering the brand name product or the sponsors of the NDA with respect to the
branded product will sue or undertake regulatory initiatives to preserve
marketing exclusivity. Any significant delay in obtaining FDA approval to market
our products as a result of litigation, as well as the expense of such
litigation, whether or not we or our collaborators are successful, could have a
materially adverse effect on our business, financial condition and results of
operations.

Risks Related to Our Securities:

The price of our common stock could be subject to
significant fluctuations. Any of the following factors could affect the
market price of our common stock:

- Our failure to achieve and maintain profitability;
- Changes in earnings estimates and recommendations by financial analysts;
- Actual or anticipated variations in our quarterly results of operations;
- Changes in market valuations of similar companies;
- Announcements by us or our competitors of significant contracts, new
  products, acquisitions, commercial relationships, joint ventures or capital
  commitments;
- The loss of major customers or product or component suppliers;
- The loss of significant partnering relationships; and
- General market, political and economic conditions.

We have a significant number of convertible securities
outstanding that could be exercised in the future. Subsequent resale of these
and other shares could cause the Companys stock price to decline. This could
also make it more difficult to raise funds at acceptable levels via future
securities offerings.

We have a concentration of stock ownership and control, and
a small number of stockholders have the ability to exert significant control in
matters requiring stockholder vote and may have interests that conflict with
yours.

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Directors and others hold 34% of our common stock. See
Security Ownership of Certain Beneficial Owners and Management. As a result,
such stockholders, acting together, may have the ability to control matters
requiring stockholder approval, including the election of directors and approval
of mergers and other significant corporate transactions. This concentration of
ownership may have the effect of delaying, preventing or deterring a change in
control of our company. It may also deprive our stockholders of an opportunity
to receive a premium for their shares as part of a sale of our company and may
affect the market price of our common stock. In deciding how to vote on such
matters, those stockholders interests may conflict with yours.

Directors Independence

Currently, we have a majority of independent directors, but in
the future we cannot guarantee that our Board of Directors will always have a
majority of independent directors. In the absence of a majority of independent
directors, our chief executive officer, who is also a principal stockholder and
director, could establish policies and enter into transactions without
independent review and approval. This could present the potential for a conflict
of interest between the Company and its stockholders generally and the
controlling officers, stockholders or directors.

Our common stock is a high risk investment.

Our common stock has been quoted on the OTC Bulletin Board
under the symbol IGXT since January 2007 and has been listed on the TSX
Venture Exchange under the symbol IGX since May 2008.

There is a limited trading market for our common stock, which
may affect the ability of shareholders to sell our common stock and the prices
at which they may be able to sell our common stock.

The market price of our common stock has been volatile, and
fluctuates widely in response to various factors which are beyond our control.
The price of our common stock is not necessarily indicative of our operating
performance or long term business prospects. In addition, the securities markets
have from time to time experienced significant price and volume fluctuations
that are unrelated to the operating performance of particular companies. These
market fluctuations may also materially and adversely affect the market price of
our common stock.

In the United States, our common stock is considered a penny
stock. The U.S. Securities and Exchange Commission has adopted rules that
regulate broker-dealer practices in connection with transactions in penny
stocks. These rules further restrict the trading activity and marketability of
our common stock.

As a result of the foregoing, our common stock should be
considered a high risk investment.

We became public by means of a reverse merger, and as a
result we are subject to the risks associated with the prior activities of the
public company with which we merged. In addition, we may not be able to attract
the attention of major brokerage firms or institutional buyers.

Additional risks may exist because we became public through a
"reverse merger" with a shell corporation. Although the shell did not have
recent or past operations or assets and we performed a due diligence review of
the public company, there can be no assurance that we will not be exposed to
undisclosed liabilities resulting from the prior operations of our company.

Security analysts of major brokerage firms and securities
institutions may not cover us since there are no broker-dealers who sold our
stock in a public offering who would have an incentive to follow or recommend
the purchase of our common stock. No assurance can be given that established
brokerage firms will want to conduct any financings for us in the future.

Item 2. Properties.

We currently occupy 3,100 square feet of leased space at a rate
of CDN$8.64/square foot in an industrial zone in Ville St.-Laurent, Quebec,
Canada under a five year renewable lease agreement signed in 2004. We extended
the term of the lease agreement to August 31, 2010 under similar financial
conditions, with the option to terminate at any time after February 28, 2010,
provided we give four months notice. We expanded our laboratory and office
space at this facility to its maximum during the second quarter of 2006. In
order to continue to support ongoing product development activities and allow
the addition of further development programs we might be required to seek a
different location in 2010. Management has started the search for alternative,
or additional, facilities that would meet our short to medium requirements at
affordable rates.

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Item 3. Legal Proceedings.

In June of 2009 we announced that our New Drug Application
filing for our antidepressant CPI-300 had been accepted by the FDA for standard
review. We entered into a collaborative agreement with Cary Pharma in November
2007 to jointly develop and commercialize CPI-300 using our proprietary oral
delivery technology. CPI-300 is a novel, high strength dosage of Bupropion HCl,
the active ingredient in Wellbutrin XL® for which Biovail Laboratories SLR
(Biovail) holds the patent. As required in connection with the filing of the
NDA, our development partner Cary Pharma, which serves as the NDA applicant,
provided notice of the NDA filing to Biovail asserting that CPI-300 would not
infringe Biovail's patents. On August 18, 2009, we learned that Cary Pharma was
named in a lawsuit filed by Biovail in the U.S. District Court for the District
of Delaware for patent infringement under the provisions of the Drug Price
Competition and Patent Term Restoration Act of 1984 with respect to Biovail's
U.S. Patent No. 6,096,341 for Wellbutrin XL®. The filing of the patent
infringement lawsuit instituted an automatic stay of any FDA approval of the NDA
until the earlier of a judgment or January 3, 2012. Although we are not a party
to the action, a negative decision may have an effect on our potential revenues
relating to CPI-300. Further, in accordance with the collaborative agreement, if
Biovail is successful in their lawsuit, we may have to indemnify Cary Pharma for
any litigation costs incurred, or damages awarded. Cary Pharma and IntelGenx
believe that CPI-300 does not infringe Biovail's patent and will vigorously
assert their rights.

Item 4. Submission of Matters to a Vote of Security Holders.

During the quarter ended December 31, 2009 no matters were
submitted to a vote of security holders.

PART II

Item 5. Market for Registrants Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity Securities.

Our common stock has been quoted on the OTC Bulletin Board
under the symbol IGXT since January 2007. In addition, our common stock has
been listed on the TSX Venture Exchange under the symbol IGX since May 2008.
The table below sets forth the high and low bid prices of our common stock as
reported by the OTC Bulletin Board and the TSX for the periods indicated. These
prices represent inter-dealer quotations without retail markup, markdown, or
commission and may not necessarily represent actual transactions.

OTCBB
      TSXHigh
      Low
      High
      Low(U.S.$)
      (U.S.$)
      (CDN$)
      (CDN$)2009Fourth Quarter
      $ 0.71
      $ 0.52
      $ 0.70
      $ 0.57Third Quarter
      $ 0.70
      $ 0.50
      $ 0.74
      $ 0.51Second Quarter
      $ 0.60
      $ 0.28
      $ 0.62
      $ 0.37First Quarter
      $ 0.60
      $ 0.25
      $ 0.75
      $ 0.402008Fourth Quarter
      $ 0.95
      $ 0.30
      $ 0.90
      $ 0.50Third Quarter
      $ 0.98
      $ 0.67
      $ 1.09
      $ 0.85Second Quarter
      $ 1.01
      $ 0.80
      $ 1.00
      $ 0.80First Quarter
      $ 1.02
      $ 0.51
      $ N/A
      $ N/A2007Fourth Quarter
      $ 1.05
      $ 0.45
      $ N/A
      $ N/AThird Quarter
      $ 1.90
      $ 0.87
      $ N/A
      $ N/ASecond Quarter
      $ 1.31
      $ 0.60
      $ N/A
      $ N/AFirst Quarter
      $ 1.20
      $ 0.67
      $ N/A
      $ N/A


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Number of Shareholders

On March 29, 2010 there were approximately 66 holders of record
  of our common shares, one of which was Cede & Co., a nominee for Depository
  Trust Company and one of which was The Canadian Depository for Securities Limited,
  or CDS. All of our common shares held by brokerage firms, banks and other financial
  institutions in the United States and Canada as nominees for beneficial owners
  are considered to be held of record by Cede & Co. in respect of brokerage
  firms, banks and other financial institutions in the United States, and by CDS
  in respect of brokerage firms, banks and other financial institutions located
  in Canada. Cede & Co. and CDS are each considered to be one shareholder
  of record.

Dividend Policy

We have never declared or paid any cash dividends on our common
stock. We currently intend to retain any earnings to support operations and to
finance the growth and development of our business. Therefore, we do not expect
to pay cash dividends in the foreseeable future. Any future determination
relating to our dividend policy will be made at the discretion of our Board of
Directors and will depend on a number of factors, including future earnings,
capital requirements, financial conditions and future prospect and other factors
that the board of directors may deem relevant.

Equity Compensation Plan Information

2006 Stock Option Plan

A majority of our shareholders approved the 2006 Stock Option
Plan at our Annual General Meeting of Stockholders held on August 10, 2006.
Under the 2006 Stock Option Plan, up to 1,600,749 shares of common stock may be
issued upon the exercise of options granted to directors, management, employees
and consultants.

In May of 2008, the term of all options granted under the 2006
Stock Option Plan was amended to provide for a term not to exceed five years, in
order to ensure compliance with applicable rules and regulation of the TSX
Venture Exchange.

At the Annual General Meeting of Stockholders on September 8,
2008, our shareholders approved an amendment to the 2006 Stock Option Plan in
order to increase the number of shares available under the plan by 473,251, to
2,074,000.

As of December 31, 2009, 2,202,676 options have been issued,
222,571 options have been exercised, 250,000 were forfeiture, 382,017 expired
and 1,348,088 options remain outstanding under the 2006 Option Plan.

Equity Compensation Plan Information as of December 31, 2009

|                                                                 | Number of Securities | Weighted-         | Number of securities  
|---------------------------------------------------------------- | -------------------- | ----------------- | ----------------------
|                                                                 | to be issued upon    | Average           | remaining available   
|                                                                 | exercise of          | Exercise Price of | for future issuance   
|                                                                 | outstanding options, | outstanding       | under equity          
|                                                                 |                      | options,          | compensation plans    
|                                                                 |                      |                   | (excluding securities 
|                                                                 |                      |                   | reflected in the first
|                                                                 |                      |                   | column)               
|                                                                 |                      |                   |                       
|Equity
      Compensation Plans Approved by Security Holders     | 1,348,088            | $0.56             | 503,341               
|                                                                 |                      |                   |                       
|Equity
      Compensation Plans Not Approved by Security Holders | None                 | None              | None                  
|                                                                 |                      |                   |                       
|Total                                                            | 1,348,088            | $0.56             | 503,341               

19

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On September 26, 2006 we granted options to purchase 225,000
shares of common stock to three non-employee directors. These options have an
exercise price of $0.41, vest upon issuance and expire on September 26, 2016.
The expire date was subsequently amended to September 26, 2011.

On October 1, 2006 we granted options to purchase up to 69,000
shares of common stock to a consultant. These options have an exercise price of
$0.41, vest upon issuance, and expire on October 1, 2016. The expire date was
subsequently amended to September 26, 2011.

On November 9, 2006 we granted options to purchase up to
450,000 shares of common stock to the CEO and a management employee. These
options have an exercise price of $0.41, vest upon issuance, and expire on
November 9, 2016. The expire date was subsequently amended to September 26,
2011.

On November 13, 2006 we granted options to purchase up to
250,000 shares of common stock to a consultant. These options have an exercise
price of $0.41, vest over two years at the rate of 25% every six months, and
expire on November 13, 2016. The expire date was subsequently amended to
September 26, 2011.

On November 16, 2006 we granted options to purchase up to
100,000 shares of common stock to employees and 25,000 options to a consultant.
These options have an exercise price of $0.41, vest over 2 years at the rate of
25% every six months, and expire on November 16, 2016. The expire date was
subsequently amended to September 26, 2011.

On August 9, 2007 we granted options to purchase up to 107,500
shares of common stock to four non-employee directors. These options have an
exercise price of $1.15, vest upon issuance, and expire on August 9, 2017. The
expire date was subsequently amended to August 9, 2012.

On August 9, 2007 we granted options to purchase up to 75,000
shares of common stock to our Vice President of Business Development. These
options have an exercise price of $1.15, vest over 2 years at the rate of 25%
every six months, and expire on August 9, 2017 The expire date was subsequently
amended to August 9, 2012.

On August 9, 2007 we granted options to purchase up to 75,000
shares of common stock to our chief financial officer. These options have an
exercise price of $1.15, vest over 2 years at the rate of 25% every six months,
and expire on August 9, 2017 The expire date was subsequently amended to August
9, 2012. As the result of the termination of the employment agreement the 75,000
options to purchase common stock expired un-exercised in November of 2008.

On May 22, 2008 we granted options to purchase up to 51,176
shares of common stock to two of our non-employee directors. These options have
an exercise price of $0.85, vest immediately and expire on May 22, 2013.

On May 29, 2008 we granted options to purchase up to 400,000
shares of common stock to Auctus Capital in consideration for investor relation
services. The option grant was subject to shareholder approval to increase the
number of shares to be issued under the 2006 Stock Option Plan. The shareholders
approved to increase the number of shares by 473,251, to 2,074,000 at the Annual
General Meeting on September 8, 2008. The options granted to Auctus Capital have
an exercise price of $1.00, and vest based on a combination of the achievement
of certain performance conditions and the passage of time. The options expire on
May 29, 2013. As the result of the termination of the agreement all options to
purchase common stock expired un-exercised in May of 2009

On September 8, 2008 we granted options to purchase up to
75,000 shares of common stock to a non-employee director of the company. These
options have an exercise price of $0.85, vest immediately and expire on
September 8, 2013.

On September 8, 2008 we granted options to purchase up to
100,000 shares of common stock to our chief financial officer. These options
have an exercise price of $0.85, vest over 2 years at the rate of 25% every six
months, and expire on September 8, 2013.

On March 11, 2009 we granted options to purchase up to 25,000
shares of common stock to an employee of the company. The options have an
exercise price of $0.31, vest over 2 years at the rate of 25% every six months,
and expire on March 11, 2014.

On October 3, 2009 we granted options to purchase up to 50,000
shares of common stock to Little Gem Life Science Partners in consideration for
investor relation services. The options have an exercise price of $0.55, vest
50% on the first, and 50% on the second anniversary of the agreement and expire
on October 3, 2012.

20

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On November 24, 2009 we granted options to purchase up to
125,000 shares of common stock each to three of our non-employee directors, the
chief financial officer and the chief executive officer. The options have an
exercise price of $0.61, The options for the non-employee directors vest
immediately, the options for the executive employees vest over 2 years at the
rate of 25% every six months. All options expire on November 24, 2014.

On January 22, 2010 we granted options to purchase up to 50,000
common stock to Sector Speak in consideration for investor relation services.
The options have an exercise price of $0.47, vest 50% on the first, and 50% on
the second anniversary of the agreement and expire on January 22, 2013.

Item 6. Selected Financial Data.

Not applicable.

Item 7. Managements Discussion and Analysis of Financial
Condition and Results of Operation.

Introduction to Managements Discussion and Analysis

The purpose of this section, Managements Discussion and
Analysis of Financial Condition and Results of Operations, is to provide a
narrative explanation of our financial statements that enables investors to
better understand our business, to enhance our overall financial disclosures, to
provide the context within which our financial information may be analyzed, and
to provide information about the quality of, and potential variability of, our
financial condition, results of operations and cash flows. Unless otherwise
indicated, all financial and statistical information included herein relates to
our continuing operations. This information should be read in conjunction with
the accompanying Consolidated Financial Statements and Notes thereto.

Company Background

We are a drug delivery company established in 2003 and
headquartered in Montreal, Quebec, Canada, which focuses on the development of
novel oral immediate-release and controlled-release products for the
pharmaceutical market. Our business strategy is to develop pharmaceutical
products based on our proprietary drug delivery technologies and, once the
viability of a product has been demonstrated, to license the commercial rights
to partners in the pharmaceutical industry. In certain cases, we rely upon our
partners in the pharmaceutical industry to fund 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 product reaches the marketing and distribution stage. The
Company 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.

The Company has also undertaken a strategy under which it will
work with pharmaceutical companies in order to develop new dosage forms for
pharmaceutical products for which patent protection is nearing expiration. Under
§(505)(b)(2) of the Food, Drug, and Cosmetics Act, the FDA may grant market
exclusivity for a term of up to three years of exclusivity following approval of
a listed drug that contains previously approved active ingredients but is
approved in a new dosage, dosage form, route of administration or combination,
or for a new use, the approval of which was required to be supported by new
clinical trials, other than bioavailability studies, conducted by or for the
sponsor. (See Government Regulation). The Company anticipates significant
returns from successfully obtaining market exclusivity in this manner.

The Company is currently continuing to develop the existing
products in its pipeline and may also perform research and development on other
potential products as opportunities arise.

The Company does not currently plan to acquire a manufacturing
facility. The Company currently purchases and/or leases, on an as-needed basis,
the equipment necessary for performing research and development activities
related to its products.

The Company plans to hire new personnel, primarily in the area
of research and development, on an as-needed basis as the Company enters into
partnership agreements and increases its research and development activities.

21

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Key Developments

Since the end of fiscal 2008 the Company improved its cash
reserves, freed its balance sheet from debt, and made significant
progress in a number of its research and development projects, the most notable
of which are the following:

Financial:

Raised approximately $3.9 million in the third quarter
through private placements:

On July 13, 2009 the Company closed a private placement
offering of approximately 10.5 million special warrants for gross proceeds of
approximately $3.6 million. Each special warrant entitles its holder to receive,
upon exercise or deemed exercise thereof, one common share of the Company and
one common share purchase warrant. Each warrant entitles the holder thereof to
purchase one common share of the Company at a price of $0.80 until July 13,
2012.

On July 22, 2009, as part of a private placement, the Company
issued 350,000 units to investors in the United States for gross proceeds of
approximately $127.5 thousand. Each unit consists of one common share of the
Company and one common share purchase warrant. Each warrant entitles the holder
to purchase one common share at an exercise price of $0.80 per common share and
expires 36 months after the date of issuance.

On September 3, 2009, as part of a private placement, the
Company issued 250,000 units to investors for gross proceeds of approximately
$92.9 thousand. Each unit consists of one common share of the Company and one
common share purchase warrant. Each warrant entitles the holder to purchase one
common share at an exercise price of $0.80 per common share and expires 36
months after the date of issuance.

Debt-free balance sheet:

Repaid convertible notes outstanding:

On September 22, 2009, the Company repaid the balance of the
convertible notes outstanding of $976.3 thousand. The Company had entered into
convertible note agreements with certain institutional and accredited investors
on May 22, 2007 for amounts totaling $1,500,000. The convertible notes bore
interest at the rate of 8% per annum, payable quarterly. The assets of the
Company, which had been pledged as security of the convertible notes, were
released upon repayment of the convertible notes.

Repaid loan payable, shareholder:

On December 4, 2009, pursuant to a board of directors
resolution dated November 5, 2009, the Company repaid the loan payable,
shareholder, in the amount of $88.2 thousand. The loan payable, shareholder, who
is also an officer of the Company, was unsecured and bore interest at 6% per
annum.

Research and Development Projects:

Antidepressant Tablet:

On April 6, 2009 IntelGenx submitted an NDA to theFDA for
CPI-300. CPI-300 is a higher strength of the antidepressant bupropion HCl, the
active ingredient in Wellbutrin XL®. The NDA was accepted for standard review by
the FDA in June 2009. As required under NDA filings, IntelGenx's development
partner Cary Pharmaceuticals (Cary), the NDA applicant, notified Biovail
Laboratories SLR (Biovail), holder of the Wellbutrin XL patent of the filing
contending non-infringement of the Wellbutrin XL patent.

On August 18, 2009, Cary was sued by Biovail in the U.S.
District Court of Delaware for patent infringement, under provisions of the Drug
Price Competition and Patent Term Restoration Act of 1984 (Hatch-Waxman Act),
with respect to Biovail's U.S. Patent No. 6,096,341. Pursuant to the
Hatch-Waxman Act, the filing of the patent infringement lawsuit by Biovail
instituted an automatic stay of FDA approval of the NDA until the earlier of a
judgment or January 3, 2012. Any decision could have an effect on IntelGenx's
potential revenues relating to CPI-300. IntelGenx believes CPI-300 does not
infringe Biovail's patent and is vigorously defending its position.

On January 11, 2010 IntelGenx announced a manufacturing site
change for CPI-300. The original manufacturer, PharmPro of Aurora, IL
("PharmPro") was sold to URL Pharma of Philadelphia, PA. As a result of this
acquisition, URL advised IntelGenx they would no longer manufacture CPI-300. IntelGenx has identified and
engaged Pillar5 Pharma, Arnprior, ON, as the new manufacturing facility for the
product. Arnprior is a state-of-the-art GMP facility with a long-standing record
of manufacturing quality product for the pharmaceutical industry. As a result of
the manufacturing site change, IntelGenx and Cary are preparing an amendment to
the NDA. IntelGenx expects that the changes will not materially affect the
existing timeline for commercialization of CPI-300.

22

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On January 21, 2010 IntelGenx announced the U.S. Patent and
Trademark Office ("USPTO") issued a formal Notice of Allowance for the patent
application protecting CPI-300. The patent was issued on March 9, 2010 under the
number US 7,674,479. It will be listed in the FDAs Orange Book and will provide
broad protection for CPI-300 against generic copies.

On February 8, 2010 IntelGenx received a Complete Response
Letter (CRL) from the FDA regarding CPI-300. The CRL lists two main issues which
need to be addressed before obtaining final approval: 1) qualification of
Pillar5 as the commercial manufacturing site and 2) an observed food effect seen
with CPI-300 and the reference product. The FDA found no other notable
deficiencies in the NDA. As noted in the January 11, 2010 press release, the FDA
was notified about Pillar5. IntelGenx believes the food effect issue can be
addressed through a label adjustment and post-approval education. In addition,
the Company plans to conduct a pilot food effect study with CPI-300 tablets
having a modified enteric coating. In the coming weeks IntelGenx will request a
meeting with FDA to clarify the steps necessary to obtain approval. IntelGenx is
confident the activities required to support the NDA amendment can be completed
in time for a submission in the second half of 2010.

Neuropathic Pain Tablet:

On April 14, 2009 IntelGenx and its development partner,
Cannasat Therapeutics Inc. (Cannasat), announced positive Phase 1b results for
Relivar, a buccal formulation of dronabinol. The randomized, single dose, double
blind crossover study compared Cannasats Relivar with Marinol 2.5 mg in healthy
volunteers. Relivar delivered twice the amount of dronabinol into the
bloodstream as the brand with no increase in side effects due to a corresponding
reduction in the metabolite responsible for the CNS adverse effects of
dronabinol. Relivar was developed using IntelGenxs proprietary AdVersa buccal
delivery technology.

On March 4, 2010 IntelGenx and Cannasat announced the signing
of a Letter of Intent for a definitive license agreement under which IntelGenx
would acquire a fifty percent ownership stake from Cannasat and an exclusive
worldwide license to develop and commercialize Relivar. Upon completion of the
transaction, IntelGenx would assume sole product development and
commercialization rights for Relivar and would forgive approximately CAD$231
thousand of debt owed by Cannasat.

Antihypertensive Tablet:

On April 20, 2009 IntelGenx announced results of a pilot study
showing development of a product bioequivalent to a leading antihypertensive.
The product was developed using IntelGenxs proprietary VersaTab delivery
technology. Scale-up activities are ongoing at the contract manufacturer. The
product is being developed under a strategic alliance between IntelGenx and DAVA
Pharmaceuticals Inc. (DAVA). Under terms of the alliance, IntelGenx will
complete the development. DAVA has commercialization rights in the U.S.
IntelGenx will receive development milestones and a share of DAVAs
revenues.

Anti-migraine Film:

On November 17, 2009 IntelGenx announced results of a pilot
study showing successful development of a product bioequivalent to a leading
anti-migraine therapy. The product was developed using IntelGenx's proprietary
VersaFilm drug delivery technology. It is anticipated the pivotal bioequivalence
study will be conducted in 2010 and the NDA filed shortly thereafter.

VersaFilm Manufacturing:

On January 25, 2010 IntelGenx announced a strategic alliance
with LTS Lohmann Therapie-Systeme AG (LTS) for the exclusive manufacturing of
pharmaceutical products developed by IntelGenx using its VersaFilm drug delivery
technology. VersaFilm is comprised of a thin polymeric film using components
that are safe and approved by the FDA.VersaFilm provides a patent-protected
method of re-formulating approved pharmaceuticals in a more convenient and
discrete oral dosage form. It is particularly intended for indications requiring
a rapid onset of action. IntelGenx currently has three products in development
using the VersaFilm technology.

23

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Currency rate fluctuations

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

Results of Operations - Year ended December 31, 2009
compared to Year ended December 31, 2008.

|In US$ thousands                    |   | 2009     |   |   | 2008     |   |   | Increase/  |   |  | Percentage | 
|----------------------------------- | - | -------- | - | - | -------- | - | - | ---------- | - |  | ---------- | 
|                                    |   |          |   |   |          |   |   | (Decrease) |   |  | Change     | 
|                                    |   |          |   |   |          |   |   |            |   |  |            | 
|Revenue                             | $ | 1,278.7  |   | $ | 976.6    |   | $ | 302.1      |   |  | 31%        | 
|                                    |   |          |   |   |          |   |   |            |   |  |            | 
|Research and Development Expenses   |   | 1,421.7  |   |   | 2,085.4  |   |   | (663.7     | ) |  | 32%        | 
|                                    |   |          |   |   |          |   |   |            |   |  |            | 
|Research and Development Tax Credit |   | (184.6   | ) |   | (305.7   | ) |   | 121.1      |   |  | 40%        | 
|                                    |   |          |   |   |          |   |   |            |   |  |            | 
|Management Salaries                 |   | 583.8    |   |   | 551.8    |   |   | 32.0       |   |  | 6%         | 
|                                    |   |          |   |   |          |   |   |            |   |  |            | 
|General and Administrative Expenses |   | 360.1    |   |   | 212.9    |   |   | 147.2      |   |  | 69%        | 
|                                    |   |          |   |   |          |   |   |            |   |  |            | 
|Professional Fees                   |   | 437.4    |   |   | 695.2    |   |   | (257.8     | ) |  | 37%        | 
|                                    |   |          |   |   |          |   |   |            |   |  |            | 
|Interest and Financing Fees         |   | 784.4    |   |   | 766.1    |   |   | 18.3       |   |  | 2%         | 
|                                    |   |          |   |   |          |   |   |            |   |  |            | 
|Foreign Exchange                    |   | (97.9    | ) |   | (122.9   | ) |   | 25.0       |   |  | 20%        | 
|                                    |   |          |   |   |          |   |   |            |   |  |            | 
|Income taxes                        |   | (130.3   | ) |   | (151.6   | ) |   | 21.3       |   |  | 14%        | 
|                                    |   |          |   |   |          |   |   |            |   |  |            | 
|Net Income (Loss)                   |   | (1,940.4 | ) |   | (2,806.4 | ) |   | 866.0      |   |  | 31%        | 

Revenue

Total revenue increased $302.1 thousand, or 31%, to $1,278.7
thousand for the year ended December 31, 2009 from $976.6 thousand for the year
ended December 31, 2008.

The increase in revenue is primarily attributable to royalty
revenues earned from commercialization of the first product fully-developed by
the Company, a prenatal multivitamin supplement marketed as Gesticare® in the
USA, which was commercialized in November 2008. Royalty revenue received in the
year ended December 31, 2009 amounted to $276.7 thousand (2008: $Nil). Revenues
invoiced pursuant to our research and development agreements with our
pharmaceutical partners for development milestones achieved improved slightly
from $945.7 thousand in 2008 to $998.2 thousand in 2009, representing an
increase of $52.5 thousand, or 6%.

Also included within revenue is interest income of $3.8
thousand and $30.9 thousand in the years ended December 31, 2009 and 2008
respectively. The decrease in interest earned reflects the change in the cash
position of the Company along with the change in financial market conditions and
interest rates.

Research and Development Expenses

R&D expenses, net of R&D tax credits, decreased by
$542.6 thousand, or 30%, to $1,237.1 for the year ended December 31, 2009 from
the previous years level of $1,779.7 thousand.

24

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Gross R&D expenses reduced by $663.7 thousand, or 32%, from
$2,085.4 thousand in the year ended December 31, 2008 to $1,421.7 thousand in
the year ended December 31, 2009. The decrease is primarily attributable to a
reduction of costs related to the development of the CPI-300 pursuant to the
collaboration agreement with Cary Pharmaceuticals, which amounted to $213.5
thousand in 2009 compared to $915.4 thousand in 2008, as a result of filing of
our NDA with the FDA.

Also included within R&D expenses for 2009 are R&D
Salaries of $409.1 thousand, approximately $1.7 thousand of which represents
non-cash compensation. This compares to R&D salaries of $422.9 thousand in
2008, including $13.4 thousand in non-cash compensation.

For the year ended December 31, 2009, we have recorded
estimated Research and Development Tax Credits and refunds of $184.6 thousand,
as compared to $305.7 thousand for 2008. The reduction relates partially to the
reduction in R&D expenses in fiscal 2009 compared with 2008, and partially
to the Companys listing on the TSX-V in May of 2008 resulting in Federal tax
credits being a credit to offset against future taxable income as opposed to
being refundable. The estimated Research and Development Tax Credits and refunds
of $184.6 thousand recorded for fiscal 2009 relates to the amount refundable by
the Quebec authorities.

Management Salaries

Management salaries increased $32.0 thousand, or 6% in 2009, to
$583.8 thousand from $551.8 thousand in 2008.

Included within management salaries are approximately $29.3
thousand in non-cash compensation in the form of options granted to non-employee
directors, as compared to $51.7 thousand in 2008, and approximately $20.7
thousand in non cash compensation resulting from options granted to management
employees in 2008 and 2009, as compared to $45.5 thousand in 2008. In 2009 the
Company paid bonuses totaling approximately $63.3 thousand to management
compared with no management bonus paid in 2008. Also included in management
salaries for 2008 are approximately $40.6 thousand in non-recurring cash
compensation to non employee directors of the Company (no such costs were
incurred in 2009).

General and Administrative (G&A) Expenses

G&A expenses increased from $212.9 thousand in 2008 to
$360.1 thousand in 2009, representing an increase of $147.2 thousand, or 69%.
The increase in G&A expense is primarily attributable to an allowance for
doubtful accounts of approximately $101.4 thousand to cover exposure to loss in
the December 31, 2009 accounts receivable balance, and approximately $24.3
thousand to write-off a deposit paid in 2008 in respect of the anticipated lease
of new premises, which Management has decided not to pursue.

Also included within G&A expenses for 2009 are directors
fees and expenses of $42.0 thousand, compared with $13.3 thousand in 2008. The
increase is primarily attributable to the implementation of annual stipends with
effect from the third quarter of 2009 of CAD$12.0 (approximately US$11.4
thousand) to our non employee directors, together with increases in attendance
fees for board and committee meetings.

Professional Fees

Professional fees for the year ended December 31, 2009
decreased by $257.8 thousand, or 37% to $437.4 thousand from $695.2 thousand in
2008.

The decrease in professional fees is primarily attributable to
management fees of approximately $222.2 thousand that were paid to Cary
Pharmaceuticals in 2008 related to the CPI 300 antidepressant (no such costs
were incurred in 2009), and expenses of approximately $108.7 thousand incurred
in 2008 related to the Companys listing on the TSX Venture Exchange. These
items were partially offset by an increase in legal expenses in 2009 of
approximately $64.4 thousand, related to the CPI-300 litigation.

Share-Based Compensation Expense, Warrants and Stock Based
Payments

Share-based compensation expense, warrants and share based
payments totaled $104.4 thousand for the year ended December 31, 2009, as
compared to $365.2 thousand for the year ended December 31, 2008.

During 2009 we expensed approximately $37.2 thousand (2008:
$58.9 thousand) for options granted to Company employees in 2007, 2008 and 2009
under the 2006 Stock Option Plan, $29.3 thousand (2008: $51.7 thousand) for
options granted to non-employee directors, and $37.9 thousand (2008: $50.4
thousand) for options granted to investor relation firms for investor relations
services.

25

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In 2008 we also expensed $111.6 thousand in connection with the
amendment of the anti-dilution terms of convertible notes issued in May 2007. As
consideration for entering into this amendment, the Company agreed to issue to
the note holders an aggregate of 159,456 fully paid common shares. At the same
time, the exercise price of outstanding warrants held by the note holders was
adjusted from $1.02 to $0.80, resulting in an increase in the fair value of the
warrant and an additional compensation charge of $92.6 thousand. Such expenses
did not recur in fiscal 2009.

There remains approximately $49.8 thousand in stock based
compensation to be expensed in fiscal 2010 and 2011 related to the issuance of
options during 2008 and 2009. We anticipate that we will issue additional
options and warrants in the future, which will continue to result in stock-based
compensation expense.

Financing Cost

We incurred interest and financing fee expense of $784.4
thousand for the year ended December 31, 2009, as compared to $766.1 thousand in
2008. Approximately $670,108 of the expense incurred in 2008 relates to non-cash
items.

The costs in the year ended December 31, 2009 relate primarily
to a non-cash accretion expense of $523.9 thousand and cash interest payments of
$668.0 thousand on the convertible notes issued in May 2007. These amounts
compare with $465.9 thousand and $79.2 thousand respectively for the year ended
December 31, 2008.

In the third quarter of 2009, $253.9 thousand of convertible
notes were exchanged for 705,158 shares of common stock. Certain convertible
note holders took advantage of a one-time option that arose as a result of our
third quarter 2009 Special Warrant Offering to convert part of the convertible
debt at CDN$0.40 (approximately US$0.36) per share as opposed to the convertible
note agreement rate of $0.70 per share. This conversion resulted in a debt
conversion expense of $174.9 thousand, which was expensed in the third quarter
of 2009.

In the year ended December 31, 2008 we also expensed $111.6
thousand related to the amendment of the anti-dilution terms of the convertible
notes whereby, as consideration for entering into this amendment, the Company
agreed to issue to the holders of the convertible notes an aggregate of 159,456
fully paid common shares. At the same time the exercise price of the outstanding
warrants to the debenture holders was adjusted from $1.02 to $0.80 resulting in
an increase in the fair value of the warrants and an additional compensation
charge of $92.6 thousand. Such expenses did not recur in fiscal 2009.

On September 22, 2009 the Company repaid the balance of the
convertible notes outstanding of $976.3 thousand. As a result, Management
anticipates a significant decrease to the Companys financing cost in future
periods.

Foreign Exchange

A foreign exchange gain of $97.9 thousand was recorded in 2009,
as compared to a foreign exchange loss of $122.9 thousand in 2008. The foreign
exchange gain in both years relate primarily to currency fluctuations between
the Canadian dollar and the U.S. dollar.

Net Loss

The net loss for the year ended December 31, 2009 improved by
$866.0 thousand, or 31%.

The Company recorded a net loss of $1,940.4 thousand in the
year ended December 31, 2009, as compared to $2,806.4 thousand in 2008. The
following summary highlights the main areas of improvement:

| | a) | Revenue increased by 31%, or approximately $302.1
      thousand, primarily as a result of the fact that the Company commenced
      receiving royalty revenues in 2009.                                                                                                                                                                                                                                                            
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b) | R&D expenses, net of R&D tax credits, reduced by
      30%, or approximately $542.6 thousand, primarily due to the filing of the
      NDA for our antidepressant CPI-300.                                                                                                                                                                                                                                                          
| | c) | Professional fees decreased by 37%, or approximately
      $257.8 thousand, primarily attributable to management fees of
      approximately $222.2 thousand that were paid to Cary Pharmaceuticals in
      2008 related to the CPI 300 antidepressant, and expenses of approximately
      $108.7 thousand incurred in 2008 related to the Companys listing on the
      TSX Venture Exchange, neither of which recurred in 2009.
| | d) | Increased General and Administrative expenses of $147.2
      thousand, primarily related to a provision for accounts receivable of
      $101.4 thousand, partly offsets the above
improvements.                                                                                                                                                                                                                                   

26

---

Non-cash related expenses totaling approximately $847.9
thousand are included within the net loss for 2009, as follows:

| | a) | $523.9 thousand in respect of accretion expense on the
      convertible notes issued in May 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b) | $174.9 thousand in respect of a debt conversion expense
      resulting from $253.9 thousand of convertible notes, which were exchanged
      for 705,158 shares of common stock in the third quarter of 2009. Certain
      convertible note holders took advantage of a one-time option that arose as
      a result of our third quarter 2009 Special Warrant Offering to convert
      part of the convertible debt at CDN$0.40 (approximately US$0.36) per share
      as opposed to the convertible note agreement rate of $0.70 per
    share.
| | c) | $44.6 thousand in respect of the amortization of fixed
      assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | d) | $37.9 thousand for options granted to investor relation
      firms as per investor relations agreements.                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | e) | $37.2 thousand for options granted to Company
      employees.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | f) | $29.3 thousand for options granted to non-employee
      directors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

Non-cash related expenses totaling approximately $882.9
thousand are included within the net loss for 2008, as follows:

| | g) | $465.9 thousand in respect of accretion expense on the
      convertible notes issued in May 2007.                                                                                                                                                                                                    
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | h) | $111.6 thousand related to the amendment of the
      anti-dilution terms of the convertible notes whereby, as consideration for
      entering into this amendment, the Company agreed to issue to the holders
      of the convertible notes an aggregate of 159,456 fully paid common
      shares.
| | i) | $92.6 thousand additional compensation charge relating to
      the amendment of the exercise price of the outstanding warrants to the
      note holders from $1.02 to $0.80 resulting in an increase in the fair
      value of the warrant.                                                        
| | j) | $58.9 thousand for options granted to Company
      employees.                                                                                                                                                                                                                                        
| | k) | $51.8 thousand in respect of the amortization of fixed
      assets.                                                                                                                                                                                                                                  
| | l) | $51.7 thousand for options granted to non-employee
      directors.                                                                                                                                                                                                                                   
| | m) | $50.4 thousand for options granted to an investor
      relation firm as per the investor relations
agreement.                                                                                                                                                                                        

Key items from the Balance Sheet

|In US$ thousands              |   |         |  |   |         |  |   | Increase/  |   |  | Percentage | 
|----------------------------- | - | ------- |  | - | ------- |  | - | ---------- | - |  | ---------- | 
|                              |   | 2009    |  |   | 2008    |  |   | (Decrease) |   |  | Change     | 
|Current Assets                | $ | 2,703.1 |  | $ | 1,464.4 |  | $ | 1,238.7    |   |  | 85%        | 
|Property and Equipment        |   | 158.4   |  |   | 157.1   |  |   | 1.3        |   |  | 1%         | 
|Current Liabilities           |   | 704.5   |  |   | 525.7   |  |   | 178.8      |   |  | 34%        | 
|Loan Payable, Shareholder     |   | -       |  |   | 82.3    |  |   | (82.3      | ) |  | N/A        | 
|Convertible notes             |   | -       |  |   | 714.5   |  |   | (714.5     | ) |  | N/A        | 
|Deferred Income Tax Liability |   | -       |  |   | 127.4   |  |   | (127.4     | ) |  | N/A        | 
|Capital Stock                 |   | 0.3     |  |   | 0.2     |  |   | 0.1        |   |  | 50%        | 
|Additional Paid-in-Capital    |   | 8,809.5 |  |   | 5,080.8 |  |   | 3,728.7    |   |  | 73%        | 

Current Assets

Current assets totaled $2,703.1 thousand at December 31, 2009,
as compared to $1,464.4 thousand at December 31, 2008. The increase of $1,238.7
thousand is primarily attributable to an increase in cash of approximately
$691.7 thousand resulting from the completion of our private placement in the
third quarter of 2009, an increase of accounts receivable of $301.2 thousand and
an increase of investment tax credits receivable of $242.6 thousand.

Prepaid Expenses

As of December 31, 2009, prepaid expenses totaled $48.1
thousand, as compared to $44.9 thousand at December 31, 2008.

27

---

Contractual Obligations and Commitments

Excluding trade accounts payable and accrued liabilities, the
Company is committed to the following contractual obligations and commitments:

|In US$ thousands            |   | **2010 (Less than** |  |   | 1 Year or | 
|--------------------------- | - | ------------------- |  | - | --------- | 
|                            |   | 1
      year)       |  |   | More      | 
|Operating Lease Obligations | $ | 17.3                |  | $ | 0         | 
|Investor relation           | $ | 83.3                |  | $ | 0         | 
|Total                       | $ | 100.6               |  | $ | 0         | 

Liquidity and Capital Resources

Our cash and cash equivalents totaled $1,524.9 thousand as of
December 31, 2009, an increase of $691.7 thousand as compared to $833.2 thousand
as of December 31, 2008. The increase is primarily attributable to proceeds
received from the private placements completed in the third quarter of 2009. Our
cash and cash equivalents balance as of December 31, 2008 included a restricted
cash amount of $277.2 thousand. This amount represented the remaining balance of
the $2,000,000 in cash that was set aside under the terms of the Collaborative
Agreement ratified on April 7, 2008 with Cary Pharmaceuticals to jointly develop
and commercialize an oral antidepressant using IntelGenxs proprietary oral
delivery technology.

As at December 31, 2009, we had an accumulated deficit of
$6,665.4 thousand, as compared to an accumulated deficit of $4,725.0 thousand as
of December 31, 2008. Total assets amounted to $2,861.5 thousand and
shareholders equity amounted to $2,157.0 thousand as of December 31, 2009, as
compared with total assets and shareholders equity of $1,621.5 thousand and
$171.6 thousand respectively, as of December 31, 2008.

As of December 31, 2009, accounts receivable totaled $618.3
thousand (2008 - $317.1 thousand), of which $138.3 thousand is a sales tax
refund which we expect to receive during the first quarter of 2010. Included
within the accounts receivable balance as of December 31, 2009 is an allowance
for doubtful debts in the amount of $109.8 thousand (2008: $nil). In addition,
we had R&D investment tax credits receivable of $511.8 thousand, as compared
to $269.2 thousand as at December 31, 2008. We expect to receive the R&D
investment tax credits during the second and third quarters of 2010.

Accounts payable and accrued liabilities as of December 31,
2009 amounted to $704.5 thousand (2008 - $525.7 thousand), of which
approximately $491.5 thousand relates to research and development activities,
approximately $92.8 thousand relates to professional fees, and approximately
$93.3 thousand relates to accrued payroll liabilities. Included within other
accruals is approximately $12.1 thousand due to shareholders.

Property and Equipment

As at December 31, 2009, the net book value of our property and
equipment amounted to $158.4 thousand, as compared to $157.1 thousand at
December 31, 2008. In the year ended December 31, 2009 additions to assets
totaled $24.6 thousand and comprised $5.5 thousand for computer equipment, $18.6
thousand for laboratory equipment, and $0.5 thousand for office equipment,
fixtures and fittings. Total depreciation in the year ended December 31, 2008
amounted to $44.6 thousand and a foreign exchange gain of $21.3 thousand was
recorded.

Loan Payable, Shareholder

Pursuant to a board of directors resolution dated November 5,
2009, the loan payable, shareholder, was repaid on December 4, 2009. The loan
payable, shareholder, who is also an officer of the Company, was unsecured and
bore interest at 6% per annum. As of December 31, 2008, the loan payable to a
shareholder had an outstanding principal amount of $82.4 thousand.

28

---

Capital Stock

As at December 31, 2009, capital stock amounted to $0.3
thousand compared to $0.2 thousand at December 31, 2008. The increase reflects
the issue of 11,076,000 shares at par value of $0.00001, which relates to the
private placements completed in the third quarter of 2009. Capital stock is
disclosed at its par value with the excess of proceeds shown in Additional
Paid-in-Capital.

Private Placement of Convertible Notes and Warrants - May
2007

On May 22, 2007 the Company entered into convertible note
agreements with certain institutional and accredited investors for amounts
totaling $1.5 million. The convertible notes bore interest at the rate of 8% per
annum and were repayable on September 22, 2009. Interest was payable quarterly
and payments commenced on July 1, 2007. The notes were convertible into common
stock of the Company, at the option of the holders, at a rate of $0.70 per
share. The Company also issued to the holders 2,142,857 stock purchase warrants
exercisable at $1.02 per share before May 22, 2012.

On May 22, 2007, the Company paid approximately $229.3 thousand
in cash consideration and issued warrants with a fair value of $83.0 thousand in
consideration for transaction costs. These transaction costs were allocated
between the convertible debt and the warrants based on their relative fair
value.

Substantially all of the assets of the Company were pledged as
security of the convertible notes. In the year ended December 31, 2009, $68.0
thousand of interest was paid (2008 - $103.8 thousand), and $523.9 thousand of
interest was accreted (2008 - $465.9 thousand).

In the year ended December 31, 2009, $253.9 thousand of the
outstanding convertible notes were converted into 705,158 common shares. Certain
convertible note holders took advantage of a one-time option that arose as a
result of our third quarter 2009 Special Warrant Offering to convert part of the
convertible notes at CDN$0.40 (approximately US$0.35) per share as opposed to
the convertible note agreement rate of $0.70 per share. This conversion resulted
in a debt conversion expense of $174.9 thousand, which was expensed in the third
quarter of 2009.

On September 22, 2009 the Company repaid the balance of the
convertible notes outstanding of $976.3 thousand and, consequently, the security
against the assets of the Company was released.

In the year ended December 31, 2008, $165.0 thousand of
convertible notes was exchanged for 235,714 shares of common stock.

Private Placements of Common Stock and Warrants - Third
Quarter of 2009

On July 13, 2009, as part of a private placement, the Company
issued 10,476,000 special warrants for gross proceeds of US$3,631.4 thousand.
Each special warrant consists of one common share and one common share purchase
warrant. Each warrant entitles the holder to purchase one common share at an
exercise price of $0.80 per common share and expires 36 months after the date of
issuance. Proceeds were allocated between the common shares and the warrants
based on their relative fair value. The common shares were recorded at a value
of $2,337.9 thousand.

The Company paid agents a cash commission in the amount of
$290.5 thousand, which is equal to 8% of the gross proceeds of the offering,
issued 419,040 common shares of the Company to the agents equal to 4% of the
number of special warrants issued in the offering and issued agents options
entitling the agents to acquire 838,080 units (consisting of one common share
and one common share purchase warrant) at $0.80 per unit, which expire 36 months
after the date of issuance. Each common share purchase warrant included in the
agents options entitles the holder to purchase one common share at an exercise
price of $0.80 per common share and expires 36 months after the date of issuance
of the unit.

In addition, the Company paid approximately $370.4 thousand in
cash consideration for other transaction costs. All the above transaction costs
have been reflected as a reduction to the common shares and the warrants based
on their relative fair values.

On July 22, 2009, as part of a private placement, the Company
issued 350,000 units to investors for gross proceeds of $127.5 thousand. Each
unit consists of one common share and one common share purchase warrant. Each
warrant entitles the holder to purchase one common share at an exercise price of
$0.80 per common share and expires 36 months after the date of issuance.
Proceeds were allocated between the common shares and the warrants based on
their relative fair values. The common shares were recorded at a value of $81.4
thousand.

29

---

In addition, the Company paid approximately $9.8 thousand in
cash consideration for other transaction costs, which have been reflected as a
reduction of the common shares and the warrants based on their relative fair
values.

On September 3, 2009, as part of a private placement, the
Company issued 250,000 units to investors for gross proceeds of $92.9 thousand.
Each unit consists of one common share and one common share purchase warrant.
Each warrant entitles the holder to purchase one common share at an exercise
price of $0.80 per common share and expires 36 months after the date of
issuance. Proceeds were allocated between the common shares and the warrants
based on their relative fair value. The common shares were recorded at a value
of $59.2 thousand.

In addition, the Company paid approximately $7.2 thousand in
cash consideration for other transaction costs, which have been reflected as a
reduction of the common shares and the warrants based on their relative fair
values.

In the year ended December 31, 2009, 31,071(2008-191,500) stock
options were exercised for 31,071 common shares having a par value of $0 in
aggregate, for cash consideration of $21.8 thousand, resulting in an increase in
additional paid-in capital of $21.8 thousand.

Additional Paid-in-Capital

Additional paid-in capital totaled $8,809.5 thousand at
December 31, 2009, as compared to $5,080.8 thousand at December 31, 2008. The
increase is attributable to increases of $2,478.4 thousand, $1,373.3 thousand,
and $160.7 thousand for the private placements completed in the third quarter of
2009 in relation to common stock issued, warrants and placement agent
compensation respectively as well as a decrease of $984.0 thousand for
transaction costs. Additional paid in capital also increased by $249.7 thousand
for stock based compensation. Of this amount, $145.3 thousand relates to agents
stock compensation for the issuance of 419,040 common shares of the Company to
the agents equal to 4% of the number of special warrants issued in the offering
completed on July 13, 2009, and $104.4 thousand relates to the amortization of
stock options granted to employees, directors, and to an investor relations
consultant. Additional paid in capital increased further by $428.8 thousand for
converted notes and by $21.8 thousand for options exercised.

Key items from the Statement of Cash Flows

|                                          |   |          |   |   |          |   |   | Increase/  |   |  | Percentage | 
|----------------------------------------- | - | -------- | - | - | -------- | - | - | ---------- | - |  | ---------- | 
|                                          |   | 2009     |   |   | 2008     |   |   | (Decrease) |   |  | Change     | 
|Operating Activities                      | $ | (1,588.2 | ) | $ | (1,737.0 | ) | $ | (148.8     | ) |  | 9%         | 
|Financing Activities                      |   | 2,131.1  |   |   | 2,478.8  |   |   | (347.7     | ) |  | 14%        | 
|Investing Activities                      |   | 254.5    |   |   | (284.3   | ) |   | 538.8      |   |  | 190%       | 
|Cash and cash equivalents - end of period |   | 1,524.9  |   |   | 556.0    |   |   | 968.9      |   |  | 174%       | 

Statement of cash flows

Net cash used by operating activities was $1,588.2 thousand in
the year ended December 31, 2009, as compared to $1,737.0 thousand for the same
period in 2008. In 2009, net cash used by operating activities consisted of an
operating loss of $1,940.4 thousand and a decrease in non-cash operating
elements of working capital of $368.2 thousand.

Non-cash items included in operating activities totaled
approximately $720.4 thousand, as follows:

| | a) | $523.9 thousand in respect of accretion expense on the
      convertible notes issued in May 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b) | $174.9 thousand in respect of a debt conversion expense
      resulting from $253.9 thousand of convertible notes, which were exchanged
      for 705,158 shares of common stock in the third quarter of 2009. Certain
      convertible note holders took advantage of a one-time option that arose as
      a result of our third quarter 2009 Special Warrant Offering to convert
      part of the convertible debt at CDN$0.40 (approximately US$0.36) per share
      as opposed to the convertible note agreement rate of $0.70 per
    share.
| | c) | $44.6 thousand in respect of the amortization of fixed
      assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | d) | $37.9 thousand for options granted to investor relation
      firms as per investor relations agreements.                                                                                                                                                                                                                                                                                                                                                                                                                                            

| | e) | $37.2 thousand for options granted to Company
    employees.                              
| | -- | ------------------------------------------------------------------------------------------
| | f) | $29.3 thousand for options granted to non-employee
      directors.                       
| | g) | ($127.4 thousand) in respect of deferred income tax
      related to the convertible debt.

30

---

Our operating activities will continue to consume our available
funds until we can generate increased revenues.

Net cash provided by financing activities was $2,131.1 thousand
for the year ended December 31, 2009, as compared to $2,478.8 thousand provided
in 2008. Of the net cash provided by financing activities in 2009, $3,851.8
thousand came from private placement financings completed in the third quarter,
less $677.9 thousand used to pay related transaction costs, and $21.8 thousand
was generated from the issue of capital stock in the second quarter. In
addition, on September 22, 2009 the Company repaid the balance of the
convertible notes outstanding of $976.3 thousand and, pursuant to a board of
directors resolution dated November 5, 2009, on December 4, 2009 repaid the
loan payable, shareholder, of $88.2 thousand, thereby freeing the Companys
balance sheet of debt.

Net cash provided by investing activities was $254.5 thousand
for the year ended December 31, 2009 compared to a use of funds of $284.3
thousand in 2008. Net cash provided by investing activities in 2009 includes
$277.2 thousand of cash that had been restricted for the CPI-300 project under
the collaborative agreement with Cary Pharmaceuticals.

Cash of $22.7 thousand was used to purchase capital assets in
2009, as compared to $7.1 thousand in 2008.

The balance of cash as of December 31, 2009 amounted to
$1,524.9 thousand, as compared to $556.0 thousand at December 31, 2008. The
increase in cash is primarily the result of proceeds from the private placements
completed in the third quarter of 2009 that was partially offset by repayment of
the balance of convertible notes outstanding as of September 22, 2009, and
repayment of a loan payable, shareholder.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Item 8. Financial Statements and Supplementary Data.

The financial statements for the fiscal years ending December
31, 2009 and 2008, required by Item 8 are set forth on pages F-1 through F-30.

Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.

Not applicable.

Item 9A. Controls and Procedures.

a. Evaluation of Disclosure Controls and Procedures

Based on an evaluation under the supervision and with the
participation of our management, our Chief Executive Officer and Chief Financial
Officer have concluded that the Company's disclosure controls and procedures as
defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of
1934, as amended (the Exchange Act) were effective as of December 31, 2009 to
ensure that information required to be disclosed by the Company in reports that
it files or submits under the Exchange Act is (i) recorded, processed,
summarized and reported within the time periods specified in the Securities and
Exchange Commission rules and forms and (ii) accumulated and communicated to the
Company's management, including our Chief Executive Officer and Chief Financial
Officer, as appropriate to allow timely decisions regarding required
disclosure.

b. Changes in Internal Controls over Financial
Reporting

Our Chief Executive Officer and Chief Financial Officer have
concluded that there were no changes in the Companys internal controls over
financial reporting during the quarter ended December 31, 2009 that have
materially affected or are reasonably likely to materially affect the Companys
internal controls over financial reporting.

31

---

c. Managements Report on Internal Control Over Financial
Reporting

Our management is responsible for establishing and maintaining
adequate internal control over financial reporting, as such term is defined in
Exchange Act Rule 13a-15(f). The Companys internal control system was designed
to provide reasonable assurance to the Companys management and board of
directors regarding the preparation and fair presentation of published financial
statements.

All internal control systems, no matter how well designed, have
inherent limitations. Therefore, even those systems determined to be effective
can provide only reasonable assurance with respect to financial statement
preparation and presentation.

The Companys management, including the Companys Chief
Executive Officer and Chief Financial Officer, assessed the effectiveness of the
Companys internal control over financial reporting as of December 31, 2009. In
making this assessment, the Companys management used the criteria set forth by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in
Internal ControlIntegrated Framework. Based on this assessment, management
believes that, as of December 31, 2009, the Companys internal control over
financial reporting was effective based on those criteria.

This Annual Report does not include an attestation report of
the Company's registered public accounting firm regarding internal control over
financial reporting. Management's report was not subject to attestation by the
company's registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit the Company to provide only
management's report in this Annual Report.

Item 9B. Other Information.

We do not have any information required to be disclosed in a
report on Form 8-K during the fourth quarter of 2009 that was not reported.

PART III

Item 10. Directors, Executive Officers and Corporate
Governance.

|Name                       | Age | Position                                                           | Position since
|-------------------------- | --- | ------------------------------------------------------------------ | --------------
|Horst G. Zerbe             | 63  | Chairman of the
      Board, President and Chief Executive Officer | April 2006    
|Paul A. Simmons            | 48  | Chief Financial Officer                                            | September 2008
|J. Bernard Boudreau(1) (2) | 65  | Director                                                           | June 2006     
|Ian Troup(1) (2)           | 67  | Director                                                           | May 2008      
|Bernd Melchers (1)         | 58  | Director                                                           | April 2009    
|Ingrid Zerbe               | 55  | Secretary and Director of Finance
      and Administration         | April 2006    

(1) Audit Committee member (2) Compensation Committee
member

All directors hold office until the next annual meeting of
stockholders and until their successors have been duly elected and qualified.
There are no agreements with respect to the election of directors. Officers are
appointed annually by the board of directors and each executive officer serves
at the discretion of the board.

Horst G. Zerbe, Ph.D.

Dr. Zerbe has more than 20 years experience in the
pharmaceutical industry. He has been the President, Chief Executive Officer, and
Chairman of IntelGenx Technologies Corp. since April 2006. In addition, Dr.
Zerbe has served as the President, Chief Executive Officer and Director of
IntelGenx Corp., our Canadian Subsidiary, since 2005. From 1998 to 2005, he
served as the president of Smartrix Technologies Inc. in Montreal; prior
thereto, from 1994 to 1998, he was Vice President of R&D at LTS Lohmann
Therapy Systems in West Caldwell, NJ. Dr. Zerbe has extensive executive level
experience, and has been responsible for many strategic and business
initiatives. Dr. Zerbe has been involved in new drug development and the
acquisition and disposition of new drug candidates and other technology, licensing and distribution matters that
are likely to affect our companys own business efforts. He has published
numerous scientific papers in recognized journals and holds over 30 patents. Dr.
Zerbe is married to Ingrid Zerbe, our Corporate Secretary and Director of Finance
and Administration.

32

---

Paul A. Simmons

Mr. Simmons was appointed as our Chief Financial Officer in
September 2008. From 2003-2008, Mr. Simmons was employed by the CLAAS Group, a
leading manufacturer of agricultural harvesting machinery. Mr. Simmons was
initially based at Group HQ in Germany as Head of Corporate Controlling. In
August 2005, he transferred to the Baler Manufacturing subsidiary (Usines CLAAS
France) as Director of Finance and Administration, where he was responsible for
developing and implementing a business turnaround plan. Following the success of
the turnaround, Mr. Simmons was transferred in September 2006 to the French
subsidiary Renault Agriculture as Head of Corporate and Industrial Controlling
with the mandate to restructure and integrate the newly acquired Tractor
Manufacturing Division into the CLAAS Group.

Mr. Simmons international finance credentials include an
Association of Financial Controllers and Administrators (AFCA) certification,
and a designation with the Association of Accounting Technicians (MAAT). He has
expertise in both U.S. Generally Accepted Accounting Principles (GAAP) and
International Financial Reporting Standards (IFRS).

J. Bernard Boudreau

Mr. Boudreau has been a director of IntelGenx since June 2006.
>From 2005 to 2008, Mr. Boudreau served as the Vice-President of Pharmeng
International Inc., a pharmaceutical manufacturing and consulting company listed
on the Toronto Stock Exchange. Since 2001, he has been President and CEO of
Radcliffe Consulting and Investment Limited, a private consulting firm located
in Halifax, N.S. Mr. Boudreau has also served on the Board of Directors of a
number of public and private companies, including Export Development Canada and
the Bank of Canada.

Mr. Boudreau has worked as a lawyer and as a public official in
Canada. His litigation experience includes appearances at every level of the
judicial system in Nova Scotia. He was appointed as Queen's Counsel in 1985. Mr.
Boudreau was first elected to the provincial legislature of Nova Scotia in 1988.
He served as Chair of the Public Accounts Committee and opposition critic for
Finance and Economic Development. In 1993 he was re-elected as a member of
government and held responsibilities as Minister of Finance, Minister of Health,
Chair of the Cabinet Priorities and Planning Committee. Mr. Boudreau served as
Government Leader in the Senate of Canada and Member of the federal Cabinet
between 1999 and 2001.

Ian (John) Troup

Mr. Troup has been a director of IntelGenx Technologies Corp.
since May 2008. From April 2008 to December 2009 Mr. Troup was a Director of Vital Medix, an
early stage drug development company. In July 2007 he was appointed to the Board
of Medisyn Technologies Inc., a privately held "in silica" drug discovery and
development company. From September 1995 until his retirement in December 2003,
Mr. Troup was President and Chief Operating Officer of Upsher-Smith
Laboratories, a privately held pharmaceutical company. Prior to this he served as
President of Schwarz Pharma in the UK for seven years, followed by serving as
President of Schwarz Pharma USA in Minnesota for an additional nine years.

Born and educated in Scotland, Mr. Troup has worked in the
pharmaceutical industry for over 35 years. Originally an industrial chemist, he
held executive positions in sales and marketing for several leading companies.
His experience includes new product development and launch, M&A and
strategic planning.

Bernd J. Melchers

Mr. Melchers has been a director of IntelGenx Technologies
Corp. since April 2009. From January 2001 until his retirement in December 2004
Mr. Melchers was Managing Director of 3 M Dyneon Holding GmbH, Germany and
Global Chief Financial Officer of the world wide operating 3M Dyneon Group, a
subsidiary of 3M Corporation headquartered in Minnesota. Prior to this he
served, from July 1995 to December 2000, as the Controller at the European
Business Center of 3M Medical Markets Europe in Belgium. Prior to this he held
various senior Financial Manager positions at the Medical-Surgical Division of
3M in St. Paul, Minnesota, at 3M Health Care Products, Germany, and at 3M
Pharmaceutical Products, Germany.

Mr. Melchers is a 30-year veteran of the pharmaceutical and
health care industry with extensive hands-on international experience in
corporate financial management. He also brings a wealth of international team
management skills and leadership experience.

33

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Ingrid Zerbe

Mrs. Zerbe is our Corporate Secretary, Director of Finance and
Administration and is a full time employee of IntelGenx . Mrs. Zerbe is the
founder of IntelGenx Corp., our Canadian subsidiary. She served as the president
of IntelGenx Corp, since its incorporation in June 2003 until December, 2005.
She has been a Director of the subsidiary since its incorporation in June, 2003
and a Director of the parent company from April 2006 until August 2006. Prior to
founding IntelGenx, she worked in the travel industry. She holds a bachelor
degree in economics from the business school in Bottrop, Germany, and a bachelor
degree in social sciences from the University of Dortmund, Germany. Mrs. Zerbe
is married to Dr. Horst Zerbe, who is a President, Director and Chief Executive
Officer.

Key Personnel and Consultants

James Wittenberg, R.Ph, MS

Mr. Wittenberg has served as IntelGenx's Vice President
Business Development since August, 2007. He has accumulated over 20 years of
experience in the pharmaceutical industry in market research and most recently
as Director of Business Development at Schwarz Pharma.

Nadine Paiement, MSc

Ms. Paiement serves as our Director of Research &
Development. She joined IntelGenx in 2006. Ms. Paiement holds a M.Sc. degree in
Polymer Chemistry from Sherbrooke University, and is co-inventor of IntelGenx's
Tri-Layer technology. Prior to joining IntelGenx, she worked for five years as a
formulation scientist at Smartrix Technologies, Inc.

The Board of Directors

Meetings of the Board of Directors

The Company's Board of Directors held four meetings during our
2009 Fiscal Year. All our Directors attended all four meetings.

Compensation of the Board of Directors

Directors are reimbursed for their out-of-pocket expenses
incurred in attending meetings of the Board of Directors. As described below in
"Director Compensation", during our 2009 Fiscal Year, our non-employee directors
were granted options to purchase an aggregate of 75,000 shares of our common
stock. Between November 2008 and the end of the second quarter of 2009, our
directors received cash compensation of CDN $500 for attending board meeting in
person and CDN$100 for participating in board meetings via teleconference.
Effective as at the third quarter of 2009 the board of directors resolved, that
the non-employee directors of the board received an annual stipend of C$12,000,
paid in quarterly installments. Furthermore an attendance fee of CDN$1,000 was
paid per board meeting. The chairmen of the board committees are entitled to
receive an additional C$500 and the members of the committees received an
additional C$250 for attending the committee meetings.

Committees of the Board of Directors

The Board of Directors has two standing committees: the Audit
Committee and the Compensation Committee. There is no Nomination Committee.

Audit Committee. The Audit Committee is currently
composed of J. Bernard Boudreau, Ian Troup and Bernd Melchers, which are
independent directors. The Audit Committee held four meetings during our 2009
Fiscal Year. Joel Cohen had served on the Audit Committee until his resignation
from the board of directors in June 2009.

Our Audit Committee assists our board of directors in
fulfilling its responsibilities for oversight and supervision of financial and
accounting matters. The chairman of the Audit Committee is J. Bernard Boudreau.
Our Audit Committees responsibilities include, among others (i) recommending to the board of directors the
engagement of the external auditor and the terms of the external auditors
engagement; (ii) overseeing the work of the external auditor, including dispute
resolution between management and the external auditor, if required; (iii) pre
approving all nonaudit service to be provided to us by our external auditor;
(iv) reviewing our financial statements, managements discussion and analysis
and annual and interim earnings press releases before this information is
publicly disclosed; (v) assessing the adequacy of procedures for our public
disclosure of financial information; (vi) establishing procedures to deal with
complaints received by us relating to our accounting and auditing matters; and
(vii) reviewing our hiring policies regarding employees of our external auditor
or former auditor. We have adopted, along with our Audit Committee, a written
charter of the Audit Committee setting out the mandate and responsibilities of
the Audit Committee which provides that the Audit Committee convene no less than
four times per year.

34

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Accordingly, the Audit Committee discusses with RSM Richter,
LLP, our auditors, our audited financial statements, including, among other
things the quality of our accounting principles, the methodologies and
accounting principles applied to significant transactions, the underlying
processes and estimates used by our management in our financial statements and
the basis for the auditor's conclusions regarding the reasonableness of those
estimates, in addition to the auditor's independence.

Audit Committee Financial Expert.Joel Cohen served as
our Audit Committee financial expert until his resignation in June of 2009. Mr.
Cohen was not an independent director, as defined in the Nasdaq Stock Market,
Inc. Marketplace Rules. Since Mr. Cohens resignation, Mr. Bernd Melchers serves
as the Financial Expert of the Audit Committee. Mr. Melchers is an independent
director as defined in the Nasdaq Stock Market, Inc. Marketplace Rules.

Compensation Committee. The Compensation Committee of
the Board of Directors currently consists of J. Bernard Boudreau and Ian Troup.
The Compensation Committee held its formal annual meeting in November 2009
during the 2009 Fiscal Year. David Coffin-Beach served on the Compensation
Committee until his resignation from the board of directors March 17, 2009.

Our Compensation Committee reviews and makes recommendations to
our board of directors concerning the compensation of our executive officers and
key employees which include the review of our executive compensation and other
human resource policies, the review and administration of any bonuses and stock
options and major changes to our benefit plans and the review of and
recommendations regarding the performance of the Chief Executive Officer and the
Chief Financial Officer of the Company. Our Compensation Committee is comprised
of non-management members of our board of directors and is required to convene
at least annually. Until his resignation in March of 2009 Mr. Coffin-Beach was
the chairman of our compensation committee. Following his resignation, Mr. Ian
Troup filled the position as chairman of the committee.

Compensation Committee Interlocks and Insider
Participation. As stated above, the Compensation Committee consists of J.
Bernard Boudreau and Ian Troup. There are no interlocking relationships, as
described by the Securities and Exchange Commission, between the Compensation
Committee members.

Executive Compensation

The key objectives of the Company's executive compensation
policies are to attract and retain key executives who are important to the
long-term success of the Company and to provide incentives for these executives
to achieve high levels of job performance and enhancement of shareholder value.
The Company seeks to achieve these objectives by paying its executives a
competitive level of base compensation for companies of similar size and
industry and by providing its executives an opportunity for further reward for
outstanding performance in both the short term and the long term.

Executive Officer Compensation. The Company's executive
officer compensation program is comprised of three elements: base salary, annual
cash bonus and long-term incentive compensation in the form of stock option
grants.

Salary. The Compensation Committee and the Board of Directors
will review base salaries for the Company's executive officers, taking into
account individual experience, job responsibility and individual performance
during the prior year. These factors are not assigned a specific weight in
establishing individual base salaries. The Compensation Committee will also
consider the Company's executive officers' salaries relative to salary
information for executives in similar industries and similarly sized companies.

Cash
Bonuses. The purpose of the cash bonus component of the compensation program
is to provide a direct financial incentive in the form of cash bonuses to
executives.

35

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Stock
Options. Stock options are the primary vehicle for rewarding long-term
achievement of Company goals. The objectives of the program are to align
employee and shareholder long-term interests by creating a strong and direct
link between compensation and increases in share value. Under the Company's
Stock Option Plan, the Board of Directors or the Compensation Committee may
authorize the grant of options to purchase common stock of the Company to key
employees of the Company. The options generally vest in increments over a period
of years established at the time of grant except for the options granted to the
non-employees directors which vest immediately.

Involvement in Certain Legal Proceedings.

None of our officers or directors have, during the last ten
years: (i) been convicted in or is currently subject to a pending a criminal
proceeding; (ii) been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to any federal or
state securities or banking laws including, without limitation, in any way
limiting involvement in any business activity, or finding any violation with
respect to such law, nor (iii) has any bankruptcy petition been filed by or
against the business of which such person was an executive officer or a general
partner, whether at the time of the bankruptcy or for the two years prior
thereto, other than Mr. Boudreau who was formerly the Vice President of Pharmeng
International Inc. from 2005 to 2008, which since filed for bankruptcy on April
14, 2009. He was also a Director of Pharmeng until April 13, 2009.

Compliance with Section 16(a) of the Exchange Act

Section 16(a) of the Exchange Act requires directors, officers
and persons who own more than 10% of a registered class of our equity securities
to file reports of ownership and change in ownership with the Securities and
Exchange Commission. Directors, officers and greater than 10% shareholders are
required by SEC regulations to furnish us with copies of all Section 16(a) forms
they file.

Based solely upon our review of the copies of such forms that
we received during the fiscal year ended December 31, 2009, we believe that each
person who at any time during the fiscal year was a director, officer, or
beneficial owner of more than ten percent of our common stock complied with all
Section 16(a) filing requirements during such fiscal year.

Code of Ethics

We have adopted a Code of Business Conduct and Ethics that
applies to our directors and officers, including our principal executive
officer, principal financial officer and principal accounting officer. The Code
of Business Conduct and Ethics is posted on our website at http://www.intelgenx.com.

Audit Committee Report

The Audit Committee reviewed and discussed the information
contained in the 2009 first, second, third and fourth quarter earnings
announcements with management of the Company and independent registered public
accounting firm prior to public release. They also reviewed and discussed the
information contained in the 2009 first, second and third quarters Forms 10-Q
and full year Form 10-K with management of the Company and independent
registered public accounting firm prior to filing with the Securities and
Exchange Commission. In addition, the Audit Committee met regularly with
management and independent registered public accounting firm on various
financial and operational matters, including to review plans and scope of audits
and audit reports and to discuss necessary action.

In connection with the Companys fiscal 2009 consolidated
financial statements, the Audit Committee has:

- reviewed and discussed with management the Companys audited consolidated
  financial statements as of and for fiscal year 2009;
- discussed with the Companys independent auditors the matters required to
  be discussed by Statement on Auditing Standards No. 114, The Auditors
  Communication with those Charged with Governance,and SEC rule 2-07; and
- received and reviewed the written disclosures and the letter from the
  Companys independent accountants required by Independence Standards Board
  Standard No. 1 (Independence Discussions with Audit Committees), as adopted by the Public
Company Accounting Oversight Board in Rule 3600T, and has discussed with the
independent accountant its independence.

36

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Based on the reviews and discussions referred to above, the
Audit Committee recommended to the Board, and the Board approved, that the
audited consolidated financial statements referred to above be included in the
Companys Annual Report on Form 10-K for fiscal year 2009.

Respectfully submitted,

J. Bernard Boudreau (Chair) Bernd
Melchers Ian Troup

Members of the Audit Committee

Item 11. Executive Compensation.

The following table sets forth all compensation awarded to, or
earned by, our Principal Executive Officer, and our two other most highly
compensated executive officers for the years indicated.

Name and principal position (a)
    Year (b)
    Salary ($) (c)
    Bonus
    Option Awards ($) (f)
    All Other Compensation ($) (i)
    Total ($) (j)Horst Zerbe, President and CEO
    2009 2008
    163,201178,427
    35,168(3)
    10,496(3)Nil
    Nil
    208,865 178,427Paul A. Simmons CFO(1)
    2009 2008
    135,227 45,738
    $19,782 
    Nil
    10,496(4)Nil
    16,917(2)
    165,505 62,655


Footnotes:

(1) Mr. Paul A. Simmons jointed the Company in September
2008.

(2) Mr. Paul A. Simmons received a cash compensation for
services provided prior to his employment agreement.

(3) Mr. Zerbe received two cash bonuses in the aggregate amount
of $35,060 and options to purchase 25,000 shares of common shares.

(4) Mr. Simmons received two cash bonuses in the aggregate
amount of $19,782 and options to purchase 25,000 shares of common shares.

Compensation Discussion and Analysis

Employment Agreements

Horst Zerbe. Effective December 1, 2005, we
entered into an employment agreement with Dr. Horst Zerbe, our President and
Chief Executive Officer. The agreement is for an indefinite period of time.
Under the agreement, Dr. Zerbe is entitled to receive: (1) a minimum base salary
of CAD$175,000 per year; and (2) an annual bonus equal to 50% of base salary
upon the performance of certain milestones set out by the board of
directors.

As per recommendation of the Compensation Committee the board
of directors approved the increase of Mr. Zerbes minimum base salary by 5% to
CAD$ 183,750 effective as of September 2008 (US$171,364 at year-end 2008).
Effective November 15, 2009 the board of directors approved the increase of Mr. Zerbes minimum base salary to CAD$ 200,000 (US$ 190,300 at year-end 2009). Mr. Zerbe also received two bonus payment in the aggregate amount
of CAD$ 40,000 and the grant of options to purchase 25,000 shares of common
stock under the companys 2006 Stock Options Plan, following the recommendation
of the Compensation Committee.

37

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Paul A. Simmons. Effective September 1, 2008, we
entered into an employment agreement with Mr. Paul A. Simmons, to serve as our
Chief Financial Officer. Under the agreement, Mr. Simmons is entitled to
receive: (1) a minimum base salary of CAD$150,000 (US$110,965 at year-end 2008)
per year, and (2) option grants under the 2006 Stock Option Plan, and (3) an
annual bonus up to 30% of his base salary upon the achievement of specific
performance targets established by the the board of directors.

As per recommendation of the Compensation Committee the board
of directors approved the increase of Mr. Simmons minimum base salary by 6% to
CAD$ 159,000 (US$ 151,290 at year-end 2009) effective as of August 2009. Mr
Simmons also received two bonus payment in the aggregate amount of CAD$ 22,500
and the grant of 25,000 options to purchase common stock under the companys
2006 Stock Options Plan, following the recommendation of the Compensation
Committee.

Incentive Plan Awards

The following table presents information regarding the
outstanding equity awards held by each of the named officers as of December 31,
2009, including the vesting dates for the portions of these awards that had not
vested as of that date.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-ENDName 
        (a)
      Number of Securities 
        Underlying 
        Unexercised 
        Options 
        (#) 
        Exercisable 
        (b)
      Number of Securities 
        Underlying 
        Unexercised 
        Options 
        (#) 
        Unexercisable 
        (c)
      Equity Incentive Plan 
        Awards: Number of 
        Securities Underlying 
        Unexercised 
        Unearned Options 
        (#) 
        (d)
      Option 
        Exercise 
        Price 
        ($) 
        (e)
      Option 
        Expiration 
        Date 
        (f)Horst G. Zerbe
      Nil
        
        225,000
      25,000
      Nil
        
        Nil
      0.61
        
        0.41
      Nov.
        24, 2014 
        Nov. 9, 2011Paul A. 
        Simmons
      Nil 
        50,000
      25,000 
        50,000 1
      Nil 
        Nil
      0.61 
        0.85
      Nov. 24, 2014 
        Sep.8, 2013


1 On September 8, 2008, 100,000 options were granted
to Mr. Paul Simmons in connection with his employment agreement. The options
vest over two years, 50,000 of which are exercisable as of year-end 2009.

2On November 24, 2009, the board of directors
approved the grant of 25,000 options to purchase common stock to each Mr. Horst
Zerbe and Mr. Paul Simmons. The options vest over two years, none of which are
exercisable as of year-end 2009.

Director Compensation

The following table sets forth compensation paid to each named
director during the year end December 31, 2009.

In addition, directors are reimbursed for reasonable expenses
incurred in their capacity as directors, including travel and other
out-of-pocket expenses incurred in connection with meetings of the board of
directors or any committee of the board of directors

38

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DIRECTOR COMPENSATIONName 
        (a)
      Fees
        
        Earned or 
        Paid in 
        Cash 
        ($) 
        (b)
      Stock 
        Awards
        ($) 
        (c)
      Option 
        Awards 
        ($) 
        (d)
      Non-Equity 
        Incentive 
        Plan 
        Compensation 
        ($) 
        (e)
      Non-Qualified 
        Deferred 
        Compensation 
        Earnings 
        ($) 
        (f)
      All 
        Other 
        Compensation 
        ($) 
        (g)
      Total ($) 
        (j)J. Bernard Boudreau2
      10,942
      Nil
      9,7521
      Nil
      Nil
      Nil
      20,694David Coffin-Beach23
      Nil
      Nil
      Nil
      Nil
      Nil
      Nil
      NilJoel Cohen24
      952
      Nil
      Nil
      Nil
      Nil
      Nil
      952John (Ian) Troup2
      9,385
      Nil
      9,7521
      Nil
      Nil
      Nil
      19,137Bernd J. Melchers2
      8,564
      Nil
      9,7521
      Nil
      Nil
      Nil
      18,316


1Represents 25,000 options to purchase common stock
issued on November 24, 2009 2 Effective as at the third quarter
of 2009 the board of directors resolved, that the non-employee directors of the
board received an annual stipend of C$12,000, paid in quarterly installments.
Furthermore an attendance fee of CDN$1,000 was paid per board meeting. The
chairmen of the board committees are entitled to receive an additional C$500 and
the members of the committees received an additional C$250 for attending the
committee meetings. Since November 2008 non-employee directors were entitled to
a cash compensation fee of 500 Canadian Dollar per board meeting attendance and
100 Canadian Dollar per board meeting attendance by conference call. The cash
amounts represent the equivalent U.S. Dollar value measured at the appropriate
year end exchange rate used in the financial statements or the actual U.S.
Dollar amounts paid at the time of payment.3Mr. Coffin-Beach
resigned from the board of directors on March 17, 2009. 4 Mr. Cohen
resigned from the board of directors on June 30, 2009.

Compensation Committee Report

The Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis appearing in this document with management
and based upon this review and discussion recommended to the Board that the
Compensation Discussion and Analysis be included in this proxy statement for
filing with the SEC.

Respectively submitted,

Ian Troup (Chair) J. Bernard
Boudreau

Members of the Compensation Committee

Directors and Officers Liability Insurance

During 2009 we carried directors and officers liability
insurance at an approximate annual cost of $18,188. As of November 15, 2009 the
insured amount has been increased to 2 Million Dollars resulting in an increased
insurance premium of annually $31,731.

39

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Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters.

The
following table sets forth certain information concerning the beneficial
ownership of our shares of common stock by our directors and executive officers,
and by each beneficial owner of five percent (5%) or more of our outstanding
common stock. Based on information available to us, all persons named in the
table have sole voting and investment power with respect to all shares of common
stock beneficially owned by them, unless otherwise indicated. Beneficial
ownership is determined in accordance with Rule 13d-3 under the Securities
Exchange Act of 1934, as amended. In computing the number of shares beneficially
owned by a person or a group and the percentage ownership of that person or
group, shares of our common stock subject to options or warrants currently
exercisable or exercisable within 60 days after the date of this prospectus are
deemed outstanding, but are not deemed outstanding for the purpose of computing
the percentage of ownership of any other person. Applicable percentage ownership
is based upon 33,081,271 shares of common stock outstanding as of March 28,
2010. Unless otherwise indicated, the address of each of the named persons is
care of IntelGenx Technologies Corp., 6425 Abrams, Ville St-Laurent, Quebec, H4S
1X9.

|Name and Address                                            |  | Amount and Nature of |     |  | Percent of | 
|----------------------------------------------------------- |  | -------------------- | --- |  | ---------- | 
|Of
      Owner                                              |  | Beneficial Ownership |     |  | Class      | 
|Horst G. Zerbe(1)                                           |  | 4,940,893.5          | (1) |  | 14.9%      | 
|Ingrid Zerbe(2)                                             |  | 5,956,356.5          | (2) |  | 18%        | 
|Bernard J. Boudreau
      (3)                               |  | 158,088              | (3) |  | *          | 
|Ian Troup(4)                                                |  | 100,000              | (4) |  | *          | 
|Paul A. Simmons(5)                                          |  | 81,250               | (5) |  | *          | 
|Bernd J. Melchers(6)                                        |  | 25,000               | (6) |  | *          | 
|All directors and officers as a group (6persons)
      (11) |  | 11,261,588           |     |  | 34%        | 

* Less than 1%.

(1) In connection with the acquisition of IntelGenx in 2006,
Horst Zerbe became our President, Chief Executive Officer and Director and
acquired 4,709,643.5 exchangeable shares of our Canadian holding corporation
6544631Canada Inc., a Canadian special purpose corporation which wholly owns
IntelGenx Corp. (the "Exchangeable Shares"). The 4,709,643.5 Exchangeable Shares
are exchangeable, on a one for one basis, into shares of common stock of
IntelGenx Technologies Corp. at Horst Zerbe's discretion. Prior to exchanging
the Exchangeable Shares for shares of common stock, Horst Zerbe has the right to
vote 4,709,643.5 shares of common stock which are currently held in trust on
behalf of Horst Zerbe. The 4,709,643.5 shares of common stock have not been
registered for resale at this time. In addition to the Exchangeable Shares,
Horst Zerbe's beneficial ownership includes 225,000 shares of common stock
underlying options granted November 9, 2006, which are currently exercisable.
The options have an exercise price of $0.41. It also includes 25,000 options to
purchase common stock at an exercise price of $0.61, granted November 24, 2009.
The options vest over two years, 25% every six months, 6,250 of which are
exercisable within 60 days of this filing.

Horst Zerbe and Ingrid Zerbe are husband and wife.

(2) In connection with the acquisition of IntelGenx in 2006,
Ingrid Zerbe became our Secretary and our director of Finance and Administration
and acquired 4,709,643.5 Exchangeable Shares. In June of 2009 Ingrid Zerbe
acquired 1,021,713 Exchangeable Shares from Joel Cohen in a private transaction.
The 5,731,356.5 Exchangeable Shares are exchangeable, on a one for one basis,
into shares of common stock of IntelGenx Technologies Corp. at Ingrid Zerbes
discretion. Prior to exchanging the Exchangeable Shares, Ingrid Zerbe has the
right to vote 5,731,356.5 shares of common stock which are currently held in
trust on behalf of Ingrid Zerbe. The 5,731,356.5 shares of common stock have not
been registered for resale at this time. In addition to the Exchangeable Shares,
Ingrid Zerbe's beneficial ownership includes 225,000 shares of common stock
underlying options granted November 9, 2006, which are currently exercisable.
The options have an exercise price of $0.41. Horst Zerbe and Ingrid Zerbe are
husband and wife.

(3) Mr. Boudreau's beneficial ownership consists of 75,000
exercisable options to purchase common stock at an exercise price of $0.70
(adjusted from $0.41 in May 2008), granted in October 2006, 32,500 exercisable
options to purchase common stock at an exercise price of $1.15, granted on
August 9, 2007 and 25,588 options to purchase common stock at an exercise price
of $0.85. On August 19, 2008 Mr. Boudreau exercised 35,000 options at an
exercise price of $0.70 in exchange for the same number of shares of common
stock. On November 24, 2009, 25,000 exercisable options to purchase common
shares at an exercise price of $0.61 were granted to Mr. Boudreau.

40

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(4) Mr. Troups beneficial ownership consists of 75,000
exercisable options to purchase common stock at an exercise price of $0.85,
granted in September of 2008. On November 24, 2009, 25,000 exercisable options
to purchase common shares at an exercise price of $0.61 were granted to Mr.
Troup.

(5) Mr. Simmons' beneficial ownership consists of 100,000
options to purchase common stock at an exercise price of $0.85, granted in
September of 2008. The Options vest over two years, 25% every six months, 75,000
of which are exercisable within 60 days of this 10K filing. It also includes
25,000 options to purchase common stock at an exercise price of $0.61, granted
November 24, 2009. The options vest over two years, 25% every six months, 6,250
of which are exercisable within 60 days of this filing.

(6) Mr. Melcher's beneficial ownership consists of 25,000
exercisable options to purchase common stock at an exercise price of $0.61,
granted in November of 2009.

Item 13. Certain Relationships and Related Transactions, and
Director Independence.

Review, Approval or Ratification of Transactions with
Related Persons

Although IntelGenx has not adopted formal procedures for the
review, approval or ratification of transactions with related persons, we adhere
to a general policy that such transactions should only be entered into if they
are on terms that, on the whole, are no more favorable, or no less favorable,
than those available from unaffiliated third parties and their approval is in
accordance with applicable law. Such transactions require the approval of our
board of directors.

During the year ended December 31, 2009, $4,900 of interest was
paid to Ingrid Zerbe, our secretary and director of finance and administration
for interest on a long-term shareholder loan. The loan in the amount of $88,200
originated in 2004 and was re-paid to Mrs. Zerbe in December of 2009. Ingrid
Zerbe was also paid $17,800 under an equipment lease for the year ended 2009.
The lease expires on August 31, 2010.

Director Independence

Three of our currently four directors are deemed independent
directors, as defined by the Nasdaq Stock Market, Inc. Marketplace Rules. We
cannot guarantee that our Board of Directors will always have a majority of
independent directors. In the absence of a majority of independent directors,
our executive officer, who is also a principal stockholder and director, could
establish policies and enter into transactions without independent review and
approval thereof. This could present the potential for a conflict of interest
between the Company and its stockholders generally and the controlling officers,
stockholders or directors.

Family Relationships

Horst Zerbe and Ingrid Zerbe are husband and wife.

Item 14. Principal Accountant Fees and Services.

The following table sets forth the fees accrued or paid to the
Company's independent registered public accounting firm during fiscal years 2009
and 2008. The Companys financial statements for those years were audited by RSM
Richter LLP.

Audit and Non-Audit Fees

|                       |   | 2009   |  |   | 2008     | 
|---------------------- | - | ------ |  | - | -------- | 
|                       |   |        |  |   |          | 
|Audit Fees (1)         | $ | 68,749 |  | $ | $115,072 | 
|Audit-Related Fees (2) |   |        |  |   |          | 
|Tax Fees (3)           | $ | 7,755  |  |   |          | 
|All Other Fees         |   |        |  |   |          | 
|Total                  | $ | 76,504 |  | $ | 115,072  | 

(1) Audit fees are fees for services provided in connection
with the audits of the Company's annual financial statements and quarterly
reviews of interim quarterly financial statements, as well as audit provided in
connection with other statutory and regulatory filings.

41

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(2) Audit-related fees are aggregate fees billed for assurance
and related services that are reasonably related to the performance of the audit
or review of the financial statements and are not otherwise reported as Audit
fees.(3) Tax fees are aggregate fees billed for professional services
rendered for tax compliance, tax advice, and tax planning.

PART IV

Item 15. Exhibits, Financial Statement Schedules

|2.1   | Share exchange agreement dated April 10, 2006,
      incorporated by reference to the Form 8-K/A filed on April 28,
  2006                                        
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                   
|3.1   | Articles of incorporation (incorporated by reference to
      the Form SB-2 (File No. 333-90149) filed on November 16, 1999)                                      
|      |                                                                                                                                                                   
|3.2   | By-Laws (incorporated by reference to the Form SB-2 (File
      No. 333-91049) filed on November 16, 1999)                                                        
|      |                                                                                                                                                                   
|3.3   | Amendment to the Articles of Incorporation (incorporated
      by reference to amendment No. 2 to Form SB-2 (File No. 333- 135591) filed
      on August 28, 2006)
|      |                                                                                                                                                                   
|4.1   | Warrants dated March 16, 2006 issued to Patrick J. Caruso
      (incorporated by reference to the Form SB-2 (File No. 333-135591), filed
      on July 3, 2006)   
|      |                                                                                                                                                                   
|5.1   | Legal Opinion (To be filed by amendment)                                                                                                                          
|      |                                                                                                                                                                   
|9.1   | Voting Trust agreement (incorporated by reference to the
      Form 8-K/A filed on April 28, 2006)                                                                
|      |                                                                                                                                                                   
|10.1  | Horst Zerbe employment agreement (incorporated by
      reference to the Form SB-2 (File No. 333-135591) filed on July 3,
    2006)                               
|      |                                                                                                                                                                   
|10.2  | Joel Cohen consulting agreement (incorporated by
      reference to the Form SB-2 (File No. No. 333-135591) filed on July 3,
      2006)                          
|      |                                                                                                                                                                   
|10.3  | Ingrid Zerbe employment agreement (incorporated by
      reference to the Form SB-2 (File No. 333-135591) filed on July 3,
    2006)                              
|      |                                                                                                                                                                   
|10.4  | Registration rights agreement, incorporated by reference
      to the Form SB-2 (File No. 333-135591) filed on July 3, 2006)                                      
|      |                                                                                                                                                                   
|10.5  | Principal's registration rights agreement (incorporated
      by reference to the Form SB-2 (File No. 333-135591) filed on July 3,
      2006)                    
|      |                                                                                                                                                                   
|10.6  | Investor relations consulting agreement (incorporated by
      reference to the Form SB-2 (File No. 333-135591) filed on July 3,
      2006).                     
|      |                                                                                                                                                                   
|10.7  | 2006 Stock Option Plan (incorporated by reference to the
      Form S-8 filed on November 21, 2006)                                                               
|      |                                                                                                                                                                   
|10.8  | Form of Securities Purchase Agreement (incorporated by
      reference to the Form 8-K filed on May 23, 2007)                                                     
|      |                                                                                                                                                                   
|10.9  | Form of 8% Secured Convertible Debenture (incorporated by
      reference to the Form 8-K filed on May 23, 2007)                                                  
|      |                                                                                                                                                                   
|10.10 | Form of Registration Rights Agreement (incorporated by
      reference to the Form 8-K filed on May 23, 2007)                                                     
|      |                                                                                                                                                                   
|10.11 | Form of Warrant (incorporated by reference to the Form
      8-K filed on May 23, 2007)                                                                           
|      |                                                                                                                                                                   
|10.12 | Form of Security Agreement (incorporated by reference to
      the Form 8-K filed on May 23, 2007)                                                                
|      |                                                                                                                                                                   
|10.13 | Subsidiary Guarantee (incorporated by reference to the
      Form 8-K filed on May 23, 2007)                                                                      
|      |                                                                                                                                                                   
|10.14 | Deed of Hypothec (incorporated by reference to the Form
      8-K filed on May 23, 2007)                                                                          
|      |                                                                                                                                                                   
|10.15 | Agency Agreement (incorporated by reference to the Form
      8-K filed on March 28, 2008)                                                                        
|      |                                                                                                                                                                   
|10.16 | Form of Subscription Agreement (incorporated by reference
      to the Form 8-K filed on March 28, 2008)                                                          
|      |                                                                                                                                                                   
|10.17 | Form of Amending Letter to Subscription Agreement
      (incorporated by reference to the Form 8-K filed on March 28,
  2008)                                     
|      |                                                                                                                                                                   
|10.18 | Form of Registration Rights Agreement (incorporated by
      reference to the Form 8-K filed on March 28, 2008)                                                   
|      |                                                                                                                                                                   
|10.19 | Form of Warrant (incorporated by reference to the Form
      8-K filed on March 28, 2008)                                                                         
|      |                                                                                                                                                                   
|10.20 | Form of Lock up Agreement (incorporated by reference to
      the Form 8-K filed on March 28, 2008)                                                               
|      |                                                                                                                                                                   
|10.21 | Brokers Warrant (incorporated by reference to the Form
      S-1 filed on March 24, 2009)                                                                        
|      |                                                                                                                                                                   
|10.22 | Form of Amended and Restated Warrant (incorporated by
      reference to the Form 8-K filed on August 4, 2008)                                                    
|      |                                                                                                                                                                   
|10.23 | Employment Contract Paul A. Simmons (incorporated by
      reference to the Form 8-K filed on September 5, 2008)                                                  
|      |                                                                                                                                                                   
|10.24 | Amended and Restated 2006 Stock Option Plan, May 29,
      2008                                                                                                   

42

---

|14                | Code of Ethics
        (incorporated by reference to the Form S-1 filed on March 24, 2009)                                                        
|----------------- | --------------------------------------------------------------------------------------------------------------------------------------------------
|                  |                                                                                                                                                   
|16.1              | Letter on change
        in certifying accountant (incorporated by reference to the Form SB-2 (File
        No. 333-135591) filed on July 3, 2006)
|                  |                                                                                                                                                   
|21.1              | Subsidiaries
        of the small business issuer (incorporated by reference to the Form SB-2
        (File No. 333-135591) filed on July 3, 2006)
|                  |                                                                                                                                                   
|23.1*             | Consent
        of RSM Richter LLP                                                                                                                
|                  |                                                                                                                                                   
|31.1*             | Certification
        of Horst G. Zerbe President and Chief Executive Officer, pursuant to Section
        302 of the Sarbanes-Oxley Act of 2002. 
|                  |                                                                                                                                                   
|31.2*             | Certification
        of Paul Simmons, Chief Financial Officer, pursuant to Section 302 of the
        Sarbanes-Oxley Act of 2002.                
|                  |                                                                                                                                                   
|32.1*             | Certification
        of Horst G. Zerbe, President and Chief Executive Officer pursuant to Section
        906 of the Sarbanes-Oxley Act of 2002. 
|                  |                                                                                                                                                   
|32.2*             | Certification
        of Paul A. Simmons, Chief Financial Officer, pursuant to Section 906 of
        the Sarbanes-Oxley Act of 2002,             
|                  |                                                                                                                                                   
|* Filed herewith.

43

---

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the
registrant has duly caused this Form 10-K Annual Report to be signed on its
behalf by the undersigned on March 29, 2010, thereunto duly authorized.

| | **INTELGENX TECHNOLOGIES CORP.**
| | --------------------------------
| |                                 
| | By:                             
| |                                 
| |                                 
| |                                 
| |                                 
| | By:                             
| |                                 
| |                                 
| |                                 

In
accordance with the requirements of the Securities Exchange Act of 1934, this
Form 10-K Annual Report has been signed by the following persons in the
capacities and on the dates indicated.

|                        | Position                                           | Date          
|----------------------- | -------------------------------------------------- | --------------
|                        |                                                    |               
|By: /s/Horst G. Zerbe   | President, Chief Executive
      Officer, Director | March 29, 2010
|Horst G. Zerbe          |                                                    |               
|                        |                                                    |               
|By: /s/Paul Simmons     | Chief Financial Officer                            | March 29, 2010
|Paul Simmons            |                                                    |               
|                        |                                                    |               
|By:/s/ Bernard Boudreau | Director                                           | March 29, 2010
|J. Bernard Boudreau     |                                                    |               
|                        |                                                    |               
|By: /s/Ian Troup        | Director                                           | March 29, 2010
|John (Ian) Troup        |                                                    |               
|                        |                                                    |               
|By:/s/Bernd Melchers    | Director                                           | March 29, 2010
|Bernd J. Melchers       |                                                    |               

44

---

IntelGenx Technologies Corp.

Consolidated Financial StatementsDecember 31,
2009 and 2008(Expressed in U.S. Funds)

---

IntelGenx Technologies Corp.

Consolidated Financial StatementsDecember 31,
2009 and 2008(Expressed in U.S. Funds)





Contents

|Report
      of Independent Registered Public Accounting Firm      | F
      - 1     
|------------------------------------------------------------------ | ----------------
|                                                                   |                 
|Consolidated
      Balance Sheets                                  | F
      - 2     
|                                                                   |                 
|Consolidated
      Statements of Shareholders' Equity              | F
      - 3 - 4 
|                                                                   |                 
|Consolidated
      Statements of Operations and Comprehensive Loss | F
      - 5     
|                                                                   |                 
|Consolidated
      Statements of Cash Flows                        | F
      - 6     
|                                                                   |                 
|Notes
      to Consolidated Financial Statements                   | F
      - 7 - 30



---

IntelGenx Technologies Corp.

RSM Richter
Chamberland S.E.N.C.R.L.Comptables agréésChartered Accountants

2, Place Alexis NihonMontréal, (Québec) H3Z 3C2Téléphone / Telephone : (514) 934-3400Télécopieur / Facsimile : (514) 934-3408www.rsmrch.com

Report of Independent Registered Public Accounting
  Firm

To the Shareholders and Board of Directors of IntelGenx Technologies Corp.

We have audited the accompanying consolidated balance sheets of
IntelGenx Technologies Corp. as at December 31, 2009 and 2008 and the related consolidated
statements of operations and comprehensive loss, shareholders' equity and cash
flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform an audit to obtain reasonable assurance whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, these consolidated financial statements present
fairly in all material respects, the financial position of the Company as at
December 31, 2009 and 2008 and the results of its operations, comprehensive
loss, and its cash flows for the years then ended in accordance with accounting
principles generally accepted in the United States.

We were not engaged to examine managements assertion about
  the effectiveness of the Companys internal control over financial reporting
  as at December 31, 2009 included in the accompanying 10  K filing and,
  accordingly, we do not express an opinion thereon.



Chartered Accountants

Montreal, Quebec March 29, 2010

---

IntelGenx Technologies Corp.

Consolidated Balance SheetsAs at December 31,
2009 and 2008(Expressed in Thousands of U.S. Dollars ($000) Except
Share and Per Share Data)

|                                                    |   | 2009     |   |   | 2008     |  
|--------------------------------------------------- | - | -------- | - | - | -------- | -
|                                                    |   |          |   |   |          |  
|Assets                                              |   |          |   |   |          |  
|                                                    |   |          |   |   |          |  
|Current                                             |   |          |   |   |          |  
|                                                    |   |          |   |   |          |  
|Cash and
      cash equivalents                     | $ | 1,524.9  |   | $ | 556.0    |  
|Restricted cash (note 5)                            |   | -        |   |   | 277.2    |  
|Accounts
      receivable                           |   | 618.3    |   |   | 317.1    |  
|Prepaid expenses                                    |   | 48.1     |   |   | 44.9     |  
|Investment tax credits
      receivable             |   | 511.8    |   |   | 269.2    |  
|                                                    |   | 2,703.1  |   |   | 1,464.4  |  
|                                                    |   |          |   |   |          |  
|Property and
      Equipment(note 6)                |   | 158.4    |   |   | 157.1    |  
|                                                    |   |          |   |   |          |  
|                                                    | $ | 2,861.5  |   | $ | 1,621.5  |  
|                                                    |   |          |   |   |          |  
|                                                    |   |          |   |   |          |  
|Liabilities                                         |   |          |   |   |          |  
|                                                    |   |          |   |   |          |  
|Current                                             |   |          |   |   |          |  
|                                                    |   |          |   |   |          |  
|Accounts
      payable and accrued liabilities      |   | 704.5    |   |   | 525.7    |  
|Convertible notes (note
      9)                    |   | -        |   |   | 714.5    |  
|Deferred income tax
      liability                 |   | -        |   |   | 127.4    |  
|                                                    |   |          |   |   |          |  
|                                                    |   | 704.5    |   |   | 1,367.6  |  
|                                                    |   |          |   |   |          |  
|Loan Payable, Shareholder(note 8)                   |   | -        |   |   | 82.3     |  
|                                                    |   |          |   |   |          |  
|Commitments and Contingency(note
      10)          |   |          |   |   |          |  
|                                                    |   |          |   |   |          |  
|Shareholders' Equity                                |   |          |   |   |          |  
|                                                    |   |          |   |   |          |  
|Capital Stock(note 11)                              |   | 0.3      |   |   | 0.2      |  
|                                                    |   |          |   |   |          |  
|Additional Paid-in-Capital                          |   | 8,809.5  |   |   | 5,080.8  |  
|                                                    |   |          |   |   |          |  
|Accumulated Other Comprehensive Income
      (Loss) |   | 12.6     |   |   | (184.4   | )
|                                                    |   |          |   |   |          |  
|Accumulated Deficit                                 |   | (6,665.4 | ) |   | (4,725.0 | )
|                                                    |   |          |   |   |          |  
|                                                    |   | 2,157.0  |   |   | 171.6    |  
|                                                    |   |          |   |   |          |  
|                                                    | $ | 2,861.5  |   | $ | 1,621.5  |  

See accompanying notes

Approved on Behalf of the Board:

|/s//Bernard J.
      Boudreau | Director
|----------------------------- | --------
|                              |         
|/s/ Horst G.
      Zerbe      | Director

F - 2

---

IntelGenx Technologies Corp.

Consolidated Statement of Shareholders' EquityFor the Year Ended December 31, 2008(Expressed in Thousands of U.S. Dollars ($000) Except Share and Per Share Data)

|                                                                          |  |                     |  |   |         |  |   |               |  |   | Accumulated   |   |   |               |   |   |          |  
|------------------------------------------------------------------------- |  | ------------------- |  | - | ------- |  | - | ------------- |  | - | ------------- | - | - | ------------- | - | - | -------- | -
|                                                                          |  |                     |  |   |         |  |   | Additional    |  |   | Other         |   |   |               |   |   | Total    |  
|                                                                          |  | Capital
      Stock |  |   | Paid-In |  |   | Comprehensive |  |   | Accumulated   |   |   | Shareholders' |  
|                                                                          |  | Number              |  |   | Amount  |  |   | Capital       |  |   | Income (Loss) |   |   | Deficit       |   |   | Equity   |  
|                                                                          |  |                     |  |   |         |  |   |               |  |   |               |   |   |               |   |   |          |  
|Balance - December 31, 2007                                               |  | 16,157,146          |  | $ | 0.2     |  | $ | 2,071.8       |  | $ | 58.5          |   | $ | (1,918.6      | ) | $ | 211.9    |  
|                                                                          |  |                     |  |   |         |  |   |               |  |   |               |   |   |               |   |   |          |  
|Foreign currency translation adjustment                                   |  | -                   |  |   | -       |  |   | -             |  |   | (242.9        | ) |   | -             |   |   | (242.9   | )
|                                                                          |  |                     |  |   |         |  |   |               |  |   |               |   |   |               |   |   |          |  
|Issue of common stock, net of transaction costs
      of $415.3 (note 11) |  | 4,001,000           |  |   | -       |  |   | 1,712.6       |  |   | -             |   |   | -             |   |   | 1,712.6  |  
|                                                                          |  |                     |  |   |         |  |   |               |  |   |               |   |   |               |   |   |          |  
|Warrants issued, net of transaction costs of
      $131.3 (note 12)       |  | -                   |  |   | -       |  |   | 541.5         |  |   | -             |   |   | -             |   |   | 541.5    |  
|                                                                          |  |                     |  |   |         |  |   |               |  |   |               |   |   |               |   |   |          |  
|Cashless warrants exercised (note 12)                                     |  | 5,186               |  |   | -       |  |   | -             |  |   | -             |   |   | -             |   |   | -        |  
|                                                                          |  |                     |  |   |         |  |   |               |  |   |               |   |   |               |   |   |          |  
|Agents options (note 12)                                                 |  | -                   |  |   | -       |  |   | 95.0          |  |   | -             |   |   | -             |   |   | 95.0     |  
|                                                                          |  |                     |  |   |         |  |   |               |  |   |               |   |   |               |   |   |          |  
|Stock-based compensation (note 12)                                        |  | -                   |  |   | -       |  |   | 161.0         |  |   | -             |   |   | -             |   |   | 161.0    |  
|                                                                          |  |                     |  |   |         |  |   |               |  |   |               |   |   |               |   |   |          |  
|Options exercised (note 12)                                               |  | 191,500             |  |   | -       |  |   | 88.7          |  |   | -             |   |   | -             |   |   | 88.7     |  
|                                                                          |  |                     |  |   |         |  |   |               |  |   |               |   |   |               |   |   |          |  
|Warrants exercised (note 12)                                              |  | 100,000             |  |   | -       |  |   | 41.0          |  |   | -             |   |   | -             |   |   | 41.0     |  
|                                                                          |  |                     |  |   |         |  |   |               |  |   |               |   |   |               |   |   |          |  
|Modification of warrant terms (note 12)                                   |  | -                   |  |   | -       |  |   | 92.6          |  |   | -             |   |   | -             |   |   | 92.6     |  
|                                                                          |  |                     |  |   |         |  |   |               |  |   |               |   |   |               |   |   |          |  
|Debenture conversions (note 9)                                            |  | 235,714             |  |   | -       |  |   | 165.0         |  |   | -             |   |   | -             |   |   | 165.0    |  
|                                                                          |  |                     |  |   |         |  |   |               |  |   |               |   |   |               |   |   |          |  
|Stock compensation to debenture holders (note
      12)                   |  | 159,456             |  |   | -       |  |   | 111.6         |  |   | -             |   |   | -             |   |   | 111.6    |  
|                                                                          |  |                     |  |   |         |  |   |               |  |   |               |   |   |               |   |   |          |  
|Net loss for the year                                                     |  | -                   |  |   | -       |  |   | -             |  |   | -             |   |   | (2,806.4      | ) |   | (2,806.4 | )
|                                                                          |  |                     |  |   |         |  |   |               |  |   |               |   |   |               |   |   |          |  
|Balance  December 31, 2008                                               |  | 20,850,002          |  | $ | 0.2     |  | $ | 5,080.8       |  | $ | (184.4        | ) | $ | (4,725.0      | ) | $ | 171.6    |  

See accompanying notes

F - 3

---

IntelGenx Technologies Corp.

Consolidated Statement of Shareholders' EquityFor the Year Ended December 31, 2009(Expressed in Thousands of U.S. Dollars ($000) Except Share and Per Share Data)

|                                                                          |  |                     |  |   |         |  |   |               |  |   | Accumulated   |   |   |               |   |   |          |  
|------------------------------------------------------------------------- |  | ------------------- |  | - | ------- |  | - | ------------- |  | - | ------------- | - | - | ------------- | - | - | -------- | -
|                                                                          |  |                     |  |   |         |  |   | Additional    |  |   | Other         |   |   |               |   |   | Total    |  
|                                                                          |  | Capital
      Stock |  |   | Paid-In |  |   | Comprehensive |  |   | Accumulated   |   |   | Shareholders' |  
|                                                                          |  | Number              |  |   | Amount  |  |   | Capital       |  |   | Income (Loss) |   |   | Deficit       |   |   | Equity   |  
|                                                                          |  |                     |  |   |         |  |   |               |  |   |               |   |   |               |   |   |          |  
|Balance - December 31, 2008                                               |  | 20,850,002          |  | $ | 0.2     |  | $ | 5,080.8       |  | $ | (184.4        | ) | $ | (4,725.0      | ) | $ | 171.6    |  
|                                                                          |  |                     |  |   |         |  |   |               |  |   |               |   |   |               |   |   |          |  
|Foreign currency translation adjustment                                   |  | -                   |  |   | -       |  |   | -             |  |   | 197.0         |   |   | -             |   |   | 197.0    |  
|                                                                          |  |                     |  |   |         |  |   |               |  |   |               |   |   |               |   |   |          |  
|Issue of common stock, net of transaction
      costs of $633.4 (note 11) |  | 11,076,000          |  |   | 0.1     |  |   | 1,845.0       |  |   | -             |   |   | -             |   |   | 1,845.1  |  
|                                                                          |  |                     |  |   |         |  |   |               |  |   |               |   |   |               |   |   |          |  
|Warrants issued, net of transaction costs
      of $350.6 (note 12)       |  | -                   |  |   | -       |  |   | 1,022.7       |  |   | -             |   |   | -             |   |   | 1,022.7  |  
|                                                                          |  |                     |  |   |         |  |   |               |  |   |               |   |   |               |   |   |          |  
|Stock-based compensation (note 12)                                        |  | -                   |  |   | -       |  |   | 104.4         |  |   | -             |   |   | -             |   |   | 104.4    |  
|                                                                          |  |                     |  |   |         |  |   |               |  |   |               |   |   |               |   |   |          |  
|Agents options (note 12)                                                 |  | -                   |  |   | -       |  |   | 160.7         |  |   | -             |   |   | -             |   |   | 160.7    |  
|                                                                          |  |                     |  |   |         |  |   |               |  |   |               |   |   |               |   |   |          |  
|Options exercised (note 12)                                               |  | 31,071              |  |   | -       |  |   | 21.8          |  |   | -             |   |   | -             |   |   | 21.8     |  
|                                                                          |  |                     |  |   |         |  |   |               |  |   |               |   |   |               |   |   |          |  
|Convertible notes conversions (note 9)                                    |  | 705,158             |  |   | -       |  |   | 428.8         |  |   | -             |   |   | -             |   |   | 428.8    |  
|                                                                          |  |                     |  |   |         |  |   |               |  |   |               |   |   |               |   |   |          |  
|Agents stock compensation (note 11)                                      |  | 419,040             |  |   | -       |  |   | 145.3         |  |   |               |   |   |               |   |   | 145.3    |  
|                                                                          |  |                     |  |   |         |  |   |               |  |   |               |   |   |               |   |   |          |  
|Net loss for the period                                                   |  | -                   |  |   | -       |  |   | -             |  |   | -             |   |   | (1,940.4      | ) |   | (1,940.4 | )
|                                                                          |  |                     |  |   |         |  |   |               |  |   |               |   |   |               |   |   |          |  
|Balance  December 31, 2009                                               |  | 33,081,271          |  | $ | 0.3     |  | $ | 8,809.5       |  | $ | 12.6          |   | $ | (6,665.4      | ) | $ | 2,157.02 |  

See accompanying notes

F - 4

---

IntelGenx Technologies Corp.

Consolidated Statements of Operations and Comprehensive LossFor the Years Ended December 31, 2009 and 2008(Expressed
in Thousands of U.S. Dollars ($000) Except Share and Per Share Data)

|                                                    |   | 2009       |   |   | 2008       |  
|--------------------------------------------------- | - | ---------- | - | - | ---------- | -
|                                                    |   |            |   |   |            |  
|Revenue                                             | $ | 1,274.9    |   | $ | 945.7      |  
|                                                    |   |            |   |   |            |  
|Interest                                            |   | 3.8        |   |   | 30.9       |  
|                                                    |   |            |   |   |            |  
|                                                    |   | 1,278.7    |   |   | 976.6      |  
|                                                    |   |            |   |   |            |  
|Expenses                                            |   |            |   |   |            |  
|                                                    |   |            |   |   |            |  
|Research and development                            |   | 1,421.7    |   |   | 2,085.4    |  
|Research
      and development tax credits          |   | (184.6     | ) |   | (305.7     | )
|Management salaries                                 |   | 583.8      |   |   | 551.8      |  
|General and
      administrative                    |   | 360.1      |   |   | 212.9      |  
|Professional fees                                   |   | 437.4      |   |   | 695.2      |  
|Depreciation                                        |   | 44.6       |   |   | 51.8       |  
|Foreign exchange                                    |   | (97.9      | ) |   | (122.9     | )
|Interest and financing fees                         |   | 784.4      |   |   | 766.1      |  
|                                                    |   | 3,349.4    |   |   | 3,934.6    |  
|                                                    |   |            |   |   |            |  
|Loss Before Income Taxes                            |   | (2,070.7   | ) |   | (2,958.0   | )
|                                                    |   |            |   |   |            |  
|Income taxes (note 13)                              |   | (130.3     | ) |   | (151.6     | )
|                                                    |   |            |   |   |            |  
|Net Loss                                            |   | (1,940.4   | ) |   | (2,806.4   | )
|                                                    |   |            |   |   |            |  
|Other Comprehensive Income                          |   |            |   |   |            |  
|                                                    |   |            |   |   |            |  
|Foreign
      currency translation adjustment       |   | (197.0     | ) |   | (242.9     | )
|                                                    |   |            |   |   |            |  
|Comprehensive Loss                                  | $ | (1,743.4   | ) | $ | (2,563.5   | )
|                                                    |   |            |   |   |            |  
|Basic Weighted Average Number of Shares Outstanding |   | 24,527,541 |   |   | 19,657,224 |  
|                                                    |   |            |   |   |            |  
|Basic and Diluted Loss Per Common Share (note 16)   | $ | (0.07      | ) | $ | (0.14      | )

See accompanying notes

F - 5

---

IntelGenx Technologies Corp.

Consolidated Statements of Cash FlowsFor the
Year Ended December 31, 2009 and 2008(Expressed in Thousands of U.S.
Dollars ($000) Except Share and Per Share Data)

|                                                                          |   | 2009     |   |   | 2008     |  
|------------------------------------------------------------------------- | - | -------- | - | - | -------- | -
|                                                                          |   |          |   |   |          |  
|Funds Provided (Used) -                                                   |   |          |   |   |          |  
|                                                                          |   |          |   |   |          |  
|Operating Activities                                                      |   |          |   |   |          |  
|                                                                          |   |          |   |   |          |  
|Net loss                                                                  | $ | (1,940.4 | ) | $ | (2,806.4 | )
|Depreciation                                                              |   | 44.6     |   |   | 51.8     |  
|Investor
      relations services                                         |   | 37.9     |   |   | 50.4     |  
|Stock-based compensation                                                  |   | 66.5     |   |   | 110.7    |  
|Modification of warrant terms                                             |   | -        |   |   | 92.6     |  
|Interest accretion                                                        |   | 523.9    |   |   | 465.9    |  
|Debt
      conversion expense                                             |   | 174.9    |   |   | -        |  
|Deferred income tax                                                       |   | (127.4   | ) |   | (151.6   | )
|Amendment of convertible
      notes                                      |   | -        |   |   | 111.6    |  
|                                                                          |   | (1,220.0 | ) |   | (2,075.0 | )
|Changes in non-cash
      operating elements of working capital (note 14) |   | (368.2   | ) |   | 338.0    |  
|                                                                          |   | (1,588.2 | ) |   | (1,737.0 | )
|                                                                          |   |          |   |   |          |  
|Financing Activities                                                      |   |          |   |   |          |  
|                                                                          |   |          |   |   |          |  
|Issue of capital stock                                                    |   | 3,873.5  |   |   | 2,930.4  |  
|Transaction costs                                                         |   | (677.9   | ) |   | (451.6   | )
|Repayment of shareholder
      loan                                       |   | (88.2    | ) |   | -        |  
|Repayment of convertible
      notes                                      |   | (976.3   | ) |   | -        |  
|                                                                          |   | 2,131.1  |   |   | 2,478.8  |  
|                                                                          |   |          |   |   |          |  
|Investing Activities                                                      |   |          |   |   |          |  
|                                                                          |   |          |   |   |          |  
|Additions to property and
      equipment                                 |   | (22.7    | ) |   | (7.1     | )
|Restricted cash (note 6)                                                  |   | 277.2    |   |   | (277.2   | )
|                                                                          |   | 254.5    |   |   | (284.3   | )
|                                                                          |   |          |   |   |          |  
|Increase in Cash and Cash Equivalents                                     |   | 797.4    |   |   | 457.5    |  
|                                                                          |   |          |   |   |          |  
|Effect of Foreign Exchange on Cash and Cash Equivalents                   |   | 171.5    |   |   | (232.5   | )
|                                                                          |   |          |   |   |          |  
|**Cash and Cash Equivalents**                                             |   |          |   |   |          |  
|Beginning of Year                                                         |   | 556.0    |   |   | 331.0    |  
|                                                                          |   |          |   |   |          |  
|End of Year                                                               | $ | 1,524.9  |   | $ | 556.0    |  

See accompanying notes

F - 6

---

IntelGenx Technologies Corp.

Notes to Consolidated Financial StatementsDecember 31, 2009 and 2008(Expressed in U.S. Funds)

|1. | Basis of Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The Company prepares its financial statements in
      accordance with accounting principles generally accepted in the United
      States. 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. | Nature of Business                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The Company specializes in the development of
      pharmaceutical products in co-operation with various pharmaceutical
      companies. The Company has developed three proprietary technologies and is
      currently utilizing these to develop 12 products, 7 of which are partnered
      and 5 of which are in the clinical development stage.                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The Companys first product, a prenatal multivitamin
      supplement marketed as Gesticare® in the USA, was commercialized in
      November 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | A New Drug Application (NDA) for the Companys second
      product, its antidepressant CPI-300, has been submitted to the U.S. Food
      and Drug Administration. CPI-300 is a novel, high strength of Bupropion
      HCl, the active ingredient in Wellbutrin XL®.                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|3. | Adoption of New Accounting Standards                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Fair Value Measurements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | SFAS No.157 as codified in FASB ASC 820 Fair Value
      Measurement and Disclosures is effective for financial assets and
      liabilities in fiscal years beginning after November 15, 2007, and for
      non-financial assets and liabilities in fiscal years beginning after
      November 15, 2008. The Company adopted ASC 820 for financial assets and
      liabilities in the first quarter of fiscal 2008 with no material impact to
      the consolidated financial statements. The Company adopted ASC 820 for
      non-financial assets and liabilities in the first quarter of fiscal 2009
      with no material impact to the consolidated financial statements.

F - 7

---

IntelGenx Technologies Corp.

Notes to Consolidated Financial StatementsDecember 31, 2009 and 2008(Expressed in U.S. Funds)

|3. | Adoption of New Accounting Standards (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Subsequent Events                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | FASB ASC 855, "Subsequent Events", which established
      principles and requirements for subsequent events is effective for interim
      or annual reporting periods ending after June 15, 2009. The statement
      details the period after the balance sheet date during which the Company
      should evaluate events or transactions that may occur for potential
      recognition or disclosure in the financial statements, the circumstances
      under which the Company should recognize events or transactions occurring
      after the balance sheet date in its financial statements and the required
      disclosures for such events. The Company adopted ASC 855 for the first
      time for its interim consolidated financial statements for the nine months
      ended September 30, 2009. Since ASC 855 at most requires additional
      disclosures, the adoption of FASB ASC 855 did not have a material impact
      on its consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | FASB Codification                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | On July 1, 2009, the FASB released the final version of
      its new Accounting Standards Codification (the Codification) as the
      single authoritative source for U.S. generally accepted accounting
      principle (US GAAP). The Codification replaces all previous U.S. GAAP
      accounting standards as described in SFAS 168, The FASB Accounting
      Standards Codification and the Hierarchy of Generally Accepted Accounting
      Principles FAS 168. The Codification replaces all previous U.S. GAAP
      accounting standards. While not intended to change U.S. GAAP, the
      Codification significantly changes the way in which the accounting
      literature is organized. It is structured by accounting topic to help
      accountants and auditors more quickly identify the guidance that applies
      to a specific accounting issue. The Company has applied the Codification
      for the first time for its interim financial statements for the nine
      months ending September 30, 2009. The adoption of the Codification did not
      have an effect on the Companys financial position and results of
      operations. However, because the Codification completely replaces existing
      standards, it will affect the way U.S. GAAP is referenced by the Company
      in its consolidated financial statements and accounting policies.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|4. | Summary of Significant Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Revenue Recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | The Company recognizes revenue from research and
      development contracts as the contracted services are performed or when
      milestones are achieved, in accordance with the terms of the specific
      agreements and when collection of the payment is reasonably assured. In
      addition, the performance criteria for the achievement of milestones are
      met if substantive effort was required to achieve the milestone and the
      amount of the milestone payment appears reasonably commensurate with the
      effort expended. Amounts received in advance of the recognition criteria
      being met, if any, are included in deferred income.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

F - 8

---

IntelGenx Technologies Corp.

Notes to Consolidated Financial StatementsDecember 31, 2009 and 2008(Expressed in U.S. Funds)

|4. | Summary of Significant Accounting Policies
      (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The Company has license agreements that specify that
      certain royalties are earned by the Company on sales of licensed products
      in the licensed territories. Licensees usually report sales and royalty
      information in the 45 days after the end of the quarter in which the
      activity takes place and typically do not provide the Company with forward
      estimates or current-quarter information. Because the Company is not able
      to reasonably estimate the amount of royalties earned during the period in
      which these licensees actually ship products, royalty revenue is not
      recognized until the royalties are reported to the Company and the
      collection of these royalties is reasonably assured.                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Use of Estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The preparation of financial statements in conformity
      with US GAAP requires management to make estimates and assumptions that
      affect the reported amounts of assets and liabilities, disclosure of
      contingent assets and liabilities at the date of the financial statements,
      and the reported amounts of revenues and expenses during the reporting
      period. The financial statements include estimates based on currently
      available information and management's judgment as to the outcome of
      future conditions and circumstances. Significant estimates in these
      financial statements include the allowance for doubtful accounts, useful
      lives and impairment of long-lived assets, stock-based compensation costs,
      determination of the fair value of the warrants issued with the
      convertible notes, the investments tax credits receivable and the
      resulting impact on the allocation of the proceeds between the convertible
      notes, the beneficial conversion feature and the warrants.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Changes in the status of certain facts or circumstances
      could result in material changes to the estimates used in the preparation
      of the financial statements and actual results could differ from the
      estimates and assumptions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Sales Tax                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | A company should disclose the amount of those taxes that
      is recognized on a gross basis in interim and annual financial statements
      for each period for which an income statement is presented if those
      amounts are significant. While the amounts are not material, the Companys
      policy is to present such taxes on a net basis in the consolidated
      statements of operations and comprehensive loss.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Financial Instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The Company estimates the fair value of its financial
      instruments based on current interest rates, market value and pricing of
      financial instruments with comparable terms. Unless otherwise indicated,
      the carrying value of these financial instruments approximates their fair
      value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Cash and Cash Equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Cash and cash equivalents is comprised of cash on hand
      and a term deposit with an original maturity date of less than three
      months that are stated at cost, which approximates fair value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

F - 9

---

IntelGenx Technologies Corp.

Notes to Consolidated Financial StatementsDecember 31, 2009 and 2008(Expressed in U.S. Funds)

|4. | Summary of Significant Accounting Policies
      (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Accounts Receivable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | The Company accounts for trade receivables at original
      invoice amount less an estimate made for doubtful receivables based on a
      review of all outstanding amounts on a monthly basis. Management
      determines the allowance for doubtful accounts by regularly evaluating
      individual customer receivables and considering a customer's financial
      condition, credit history and current economic conditions. The Company
      writes off trade receivables when they are deemed uncollectible. The
      Company records recoveries of trade receivables previously written-off
      when they receive them. Management considers that the allowance for
      doubtful accounts of approximately $109.8 thousand is necessary in order
      to adequately cover exposure to loss in its December 31, 2009 accounts
      receivable (2008 - $Nil).
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Investment Tax Credits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Investment tax credits relating to qualifying
      expenditures are recognized in the accounts at the time at which the
      related expenditures are incurred and there is reasonable assurance of
      their realization. Management has made estimates and assumptions in
      determining the expenditures eligible for investment tax credits
      claimed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Property and Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Property 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

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.

Impairment of Long-lived Assets

Long-lived assets held and used by the
Company are reviewed for possible impairment whenever events or changes in
circumstances indicate the carrying amount of an asset may not be recoverable.
Recoverability of assets to be held and used is measured by a comparison of the
carrying amount of the assets to the estimated undiscounted cash flows expected
to be generated by the asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
amount of the asset exceeds the fair value thereof.

F - 10

---

IntelGenx Technologies Corp.

Notes to Consolidated Financial StatementsDecember 31, 2009 and 2008(Expressed in U.S. Funds)

|4. | Summary of Significant Accounting Policies
      (Contd)                                                                                                                                                                                                                                                       
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                 
|   | Foreign Currency Translation                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                 
|   | The Company's reporting currency is the United States
      dollar. The Canadian dollar is the functional currency of the Company's
      Canadian operations, which is translated to the United States dollar using
      the current rate method. Under this method, accounts are translated as
      follows:

Assets and liabilities - at exchange
rates in effect at the balance sheet date;

Revenue and expenses - at average
exchange rates prevailing during the year.

Gains and losses arising from foreign
currency translation are included in other comprehensive income.

Income Taxes

The Company accounts for income taxes
in accordance with FASB ASC 740 "Income Taxes". Deferred taxes are provided on
the liability method whereby deferred tax assets are recognized for deductible
temporary differences, and deferred tax liabilities are recognized for taxable
temporary differences. Temporary differences are the differences between the
reported amounts of assets and liabilities and their tax bases. Deferred tax
assets are reduced by a valuation allowance when, in the opinion of management,
it is more likely than not that some portion or all of the deferred tax assets
will be realized. Deferred tax assets and liabilities are adjusted for the
effects of changes in tax laws and rates on the date of enactment.

Unrecognized Tax Benefits

The Company accounts for unrecognized
tax benefits in accordance with FASB ASC 740 Income Taxes. ASC 740 prescribes
a recognition threshold that a tax position is required to meet before being
recognized in the financial statements and provides guidance on de-recognition,
measurement, classification, interest and penalties, accounting in interim
periods, disclosure and transition issues. ASC 740 contains a two-step approach
to recognizing and measuring uncertain tax positions. The first step is to
evaluate the tax position for recognition by determining if the weight of
available evidence indicates that it is more likely than not that the position
will be sustained upon ultimate settlement with a taxing authority, including
resolution of related appeals or litigation processes, if any. The second step
is to measure the tax benefit as the largest amount that is more than 50% likely
of being realized upon ultimate settlement.

Additionally, ASC 740 requires the
Company to accrue interest and related penalties, if applicable, on all tax
positions for which reserves have been established consistent with
jurisdictional tax laws. The Company elected to classify interest and penalties
related to the unrecognized tax benefits in the income tax provision.

F - 11

---

IntelGenx Technologies Corp.

Notes to Consolidated Financial StatementsDecember 31, 2009 and 2008(Expressed in U.S. Funds)

|4. | Summary of Significant Accounting Policies
      (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Share-Based Payments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | The Company accounts for share-based payments to
      employees in accordance with the provisions of FASB ASC 718
      "CompensationStock Compensation" and accordingly recognizes in its
      financial statements share-based payments at their fair value. In
      addition, the Company will recognize in the financial statements an
      expense based on the grant date fair value of stock options granted to
      employees. The expense will be recognized on a straight-line basis over
      the vesting period and the offsetting credit will be recorded in
      additional paid-in capital. Upon exercise of options, the consideration
      paid together with the amount previously recorded as additional paid-in
      capital will be recognized as capital stock. The Company estimates its
      forfeiture rate in order to determine its compensation expense arising
      from stock-based awards. The Company uses the Black-Scholes option pricing
      model to determine the fair value of the options.                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | The Company measures compensation expense for its
      non-employee stock-based compensation under ASC 505-50, Accounting for
      Equity Instruments that are Issued to Other Than Employees for Acquiring,
      or in Conjunction with Selling, Goods or Services". The fair value of the
      option issued is used to measure the transaction, as this is more reliable
      than the fair value of the services received. The fair value is measured
      at the value of the Companys common stock on the date that the commitment
      for performance by the counterparty has been reached or the counterpartys
      performance is complete. The fair value of the equity instrument is
      charged directly to compensation expense and additional paid-in capital.
      For common stock issuances to non-employees that are fully vested and are
      for future periods, the Company classifies these issuances as prepaid
      expenses and expenses the prepaid expenses over the service period. At no
      time has the Company issued common stock for a period that exceeds one
      year.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Loss Per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Basic loss per share is calculated based on the weighted
      average number of shares outstanding during the year. Any antidilutive
      instruments are excluded from the calculation of diluted loss per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Fair Value Measurements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | ASC 820 applies to all assets and liabilities that are
      being measured and reported on a fair value basis. ASC 820 requires new
      disclosure that establishes a framework for measuring fair value in US
      GAAP, and expands disclosure about fair value measurements. This statement
      enables the reader of the financial statements to assess the inputs used
      to develop those measurements by establishing a hierarchy for ranking the
      quality and reliability of the information used to determine fair values.
      The statement requires that assets and liabilities carried at fair value
      be classified and disclosed in one of the following three categories:                                                                                                                                                                                                                                                                                                                                                                                                                   



| | Level 1: | Quoted market prices in active
      markets for identical assets or liabilities.                
| | -------- | -------------------------------------------------------------------------------------------------
| | Level 2: | Observable market based inputs or
      unobservable inputs that are corroborated by market data.
| | Level 3: | Unobservable inputs that are not
      corroborated by market data.                              

F - 12

---

IntelGenx Technologies Corp.

Notes to Consolidated Financial StatementsDecember 31, 2009 and 2008(Expressed in U.S. Funds)

|4. | Summary of Significant Accounting Policies
      (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | In determining the appropriate levels, the Company
      performs a detailed analysis of the assets and liabilities that are
      subject to ASC 820. At each reporting period, all assets and liabilities
      for which the fair value measurement is based on significant unobservable
      inputs are classified as Level 3. There are no assets or liabilities
      measured at fair value as at December 31, 2009.                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Fair Value of Financial Instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | The fair value represents managements best estimates
      based on a range of methodologies and assumptions. The carrying value of
      receivables and payables arising in the ordinary course of business and
      the investment tax credits receivable and the convertible notes
      approximate fair value because of the relatively short period of time
      between their origination and expected realization. The loan payable,
      shareholder is presumed to have a fair value measured by the cash proceeds
      exchanged at issuance.                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | The convertible notes use significant unobservable inputs
      and thus are shown as Level 3 hierarchy items. The fair value of the
      convertible notes is calculated by discounting the stream of future
      payments of interest and principal at the prevailing market rate for a
      similar liability that does not have an associated equity component.
      Results of discounted cash flow calculations may be adjusted, as
      appropriate, to reflect other market conditions or the perceived changes
      in credit risk of the borrower. As at December 31, 2009, the fair value of
      the convertible notes, excluding unamortized discounts was $Nil (2008-
      $1,099.3).
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Recent Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | In June 2009, the FASB issued FAS 166, "Accounting for
      Transfers of Financial Assets an amendment of FASB Statement No. 140", as
      codified in FASB ASC 860 Transfer and servicing, which amends the
      derecognition guidance in FASB Statement No. 140 and eliminates the
      exemption from consolidation for qualifying special- purpose entities.
      This statement is effective for financial asset transfers occurring after
      the beginning of an entity's first fiscal year that begins after November
      15, 2009. The adoption of ASC 860 is not expected to have a material
      effect on the Companys financial position or results of
  operations.            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | In June 2009, the FASB issued FAS 167, "Amendments to
      FASB Interpretation No. 46(R)", as codified in FASB ASC 810
      Consolidation, which amends the consolidation guidance applicable to
      variable interest entities. The amendments will significantly affect the
      overall consolidation analysis under FASB Interpretation No. 46(R). This
      statement is effective as of the beginning of the first fiscal year that
      begins after November 15, 2009. The adoption of ASC 810 is not expected to
      have a material effect on the Companys financial position or results of
      operations.                                                                        

F - 13

---

IntelGenx Technologies Corp.

Notes to Consolidated Financial StatementsDecember 31, 2009 and 2008(Expressed in U.S. Funds)

|4. | Summary of Significant
      Accounting Policies (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | In October 2009, the FASB issued Update No. 2009-13,
      Revenue Recognition (Topic 605)Multiple-Deliverable Revenue Arrangements
      a consensus of the FASB Emerging Issues Task Force (ASU 2009-13). ASU
      2009-13 provides amendments to the criteria in ASC 605-25
      Multiple-Element Arrangements for separating consideration in
      multiple-deliverable arrangements. As a result of those amendments,
      multiple-deliverable arrangements will be separated in more circumstances
      than under existing U.S. GAAP. ASU 2009-13: 1) establishes a selling price
      hierarchy for determining the selling price of a deliverable, 2)
      eliminates the residual method of allocation and requires that arrangement
      consideration be allocated at the inception of the arrangement to all
      deliverables using the relative selling price method, 3) requires that a
      vendor determine its best estimate of selling price in a manner that is
      consistent with that used to determine the price to sell the deliverable
      on a standalone basis, 4) significantly expands the disclosures related to
      a vendors multiple-deliverable revenue arrangements. ASU 2009- 13 is
      effective prospectively for revenue arrangements entered into or
      materially modified in fiscal years beginning on or after June 15, 2010.
      The Company is currently evaluating the impact of adopting ASU 2009-13.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | In October 2009, the FASB issued Update No. 2009-14,
      Software (Topic 985)Certain Revenue Arrangements That Include Software
      Elements a consensus of the FASB Emerging Issues Task Force (ASU
      2009-14). ASU 2009-14 changes the accounting model for revenue
      arrangements that include both tangible products and software elements and
      provides additional guidance on how to determine which software, if any,
      relating to tangible product would be excluded from the scope of the
      software revenue guidance. In addition, ASU 2009-14 provides guidance on
      how a vendor should allocate arrangement consideration to deliverables in
      an arrangement that includes both tangible products and software. ASU
      2009-14 is effective prospectively for revenue arrangements entered into
      or materially modified in fiscal years beginning on or after June 15,
      2010. The adoption of ASU 2009-14 is not expected to have a material
      effect on the Companys financial position or results of operations.                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | In October, 2009, the FASB issued Update No. 2009-15
      (ASU 2009-15), Accounting for Own-Share Lending Arrangements in
      Contemplation of Convertible Debt Issuance or Other Financing. This
      update amends FASB ASC 470, Debt and provides guidance for accounting
      and reporting for own-share lending arrangements issued in contemplation
      of a convertible debt issuance. At the date of issuance, a share-lending
      arrangement entered into on an entitys own shares should be measured at
      fair value in accordance with FASB ASC 820, Fair value measurement and
      disclosure and recognized as an issuance cost, with an offset to
      additional paid-in capital. Loaned shares are excluded from basic and
      diluted earnings per share unless default of the share-lending arrangement
      occurs. The amendments also require several disclosures including a
      description and the terms of the arrangement and the reason for entering
      into the arrangement. The effective dates of the amendments are dependent
      upon the date the share-lending arrangement was entered into and include
      retrospective application for arrangements outstanding as of the beginning
      of fiscal years beginning on or after December 15, 2009. The adoption of
      ASU 2009-15 is not expected to have a material effect on the Companys
      financial position or results of operations.        

F - 14

---

IntelGenx Technologies Corp.

Notes to Consolidated Financial StatementsDecember 31, 2009 and 2008(Expressed in U.S. Funds)

|4. | Summary of Significant Accounting Policies
      (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | In December 2009, the FASB issued Update No. 2009-16
      (ASU 2009-16), Accounting for Transfers of Financial Assets, which is
      an amendment of FASB ASC 860, Transfers and Servicing. This update will
      require more information about the transfer of financial assets. More
      specifically, ASU 2009-16 eliminates the concept of a special purpose
      entity, changes the requirements for derecognizing financial assets, and
      enhances the information reported to users of financial statements. This
      update will be effective for fiscal years beginning on or after November
      15, 2009. Early application is not permitted. The adoption of ASU 2009-16
      is not expected to have a material effect on the Companys financial
      position or results of operations.                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|5. | Collaborative Agreements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | On April 7, 2008, the Company ratified with Cary
      Pharmaceuticals, a pharmaceutical development company, an Agreement to
      jointly develop and commercialize an oral antidepressant using IntelGenxs
      proprietary oral delivery technology. Under the terms of the agreement,
      IntelGenx will provide funding and development support for the product and
      will be entitled to profit sharing. The Company accounts for this
      transaction as a collaborative agreement as defined as FASB ASC 808
      Collaborative Arrangements. Per the Agreement, $2.0 million of the
      Companys cash and cash equivalents was initially restricted for the
      funding of this venture. This cash was taken from the proceeds of the
      private placement of March 27, 2008 and, in accordance with the project
      plan, had been fully expensed as of December 31, 2009. Development
      expenses exceeding $2.0 million are being shared equally by the Company
      and Cary Pharmaceuticals in accordance to the Agreement.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | As of December 31, 2009, the Company has expensed
      approximately $XX on the project. Included within these disbursements is
      approximately $222.2 thousand paid to Cary Pharmaceuticals in 2008 in
      respect of management fees and approximately $7.1 thousand paid to Cary
      Pharmaceuticals during 2009 in respect of liability insurance. All
      expenses incurred with respect to the collaborative agreement were
      expensed in the statement of operations and were classified as research
      and development expenses and professional fees. In the year ended December
      31, 2009 the Company received approximately $81.1 thousand from Cary
      Pharmaceuticals in respect of their share of disbursements exceeding the
      Companys initial investment of $2.0 million.                                                                                                                                                                                                                                            

F - 15

---

IntelGenx Technologies Corp.

Notes to Consolidated Financial StatementsDecember 31, 2009 and 2008(Expressed in U.S. Funds)

|6. | Property and Equipment
|-- | ----------------------



| |                                 |   |       |  |   |              |  |   | 2009         |  |   | 2008         | 
| | ------------------------------- | - | ----- |  | - | ------------ |  | - | ------------ |  | - | ------------ | 
| | In US$ thousands                |   |       |  |   | Accumulated  |  |   | Net Carrying |  |   | Net Carrying | 
| |                                 |   | Cost  |  |   | Depreciation |  |   | Amount       |  |   | Amount       | 
| |                                 |   |       |  |   |              |  |   |              |  |   |              | 
| | Laboratory and office equipment | $ | 294.4 |  | $ | 158.4        |  | $ | 136.0        |  | $ | 128.1        | 
| | Computer equipment              |   | 33.7  |  |   | 19.7         |  |   | 14.0         |  |   | 11.5         | 
| | Leasehold improvements          |   | 59.4  |  |   | 51.0         |  |   | 8.4          |  |   | 17.5         | 
| |                                 |   |       |  |   |              |  |   |              |  |   |              | 
| |                                 | $ | 387.5 |  | $ | 229.1        |  | $ | 158.4        |  | $ | 157.1        | 



|7. | Accounts Payable and Accrued Liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Included in accounts payable and accrued liabilities is
      approximately $12.1 thousand (2008 - $13.4 thousand) payable to
      shareholders, who are also officers of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|8. | Loan Payable, Shareholder                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Pursuant to a board of directors resolution dated
      November 5, 2009, the loan payable, shareholder, was repaid on December 4,
      2009. The loan payable, shareholder, who is also an officer of the
      Company, was unsecured and bore interest at 6% per annum. Interest
      incurred during the year amounted to approximately $4.9 thousand (2008 -
      $5.6 thousand) which is measured at the exchange amount.                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|9. | Convertible Notes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | On May 22, 2007 the Company entered into convertible note
      agreements with certain institutional and accredited investors for amounts
      totaling $1.5 million. The convertible notes bore interest at the rate of
      8% per annum and were repayable on September 22, 2009. Interest was
      payable quarterly and payments commenced on July 1, 2007. The notes were
      convertible into common stock of the Company, at the option of the
      holders, at a rate of $0.70 per share. The Company also issued to the
      holders 2,142,857 stock purchase warrants exercisable at $1.02 per share
      before May 22, 2012.

F - 16

---

IntelGenx Technologies Corp.

Notes to Consolidated Financial StatementsDecember 31, 2009 and 2008(Expressed in U.S. Funds)

|9. | Convertible Notes (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The Company recognized the value of the embedded
      beneficial conversion feature of $490.1 thousand as additional paid in
      capital and an equivalent discount which was expensed over the term of the
      convertible notes. In addition, in accordance with ASC 470 Debt with
      Conversion and Other Options, the Company allocated the proceeds of
      issuance between the convertible notes and the detachable warrants based
      on their relative fair value. Accordingly, the Company recognized the fair
      value of the detachable warrants of $490.1 thousand as additional paid in
      capital and an equivalent discount against the convertible notes. The
      difference between the face amount of the convertible notes and their
      carrying value was amortized over the life of the convertible notes. The
      Black Scholes Model was used to calculate the fair value of the warrants.
      The underlying assumptions included in the Black-Scholes Model were as
      follows:



| | Expected volatility     | 64%    
| | ----------------------- | -------
| | Contractual life        | 5 years
| | Risk-free interest rate | 4.39%  
| | Dividend yield          | Nil    

Substantially all of the assets of the
Company were pledged as security of the convertible notes. In the year ended
December 31, 2009, $68.0 thousand of interest was paid (2008 - $103.8 thousand),
and $523.9 thousand of interest was accreted (2008 - $465.9 thousand).

In the year ended December 31, 2009,
$253.9 thousand (2008 - $165.0 thousand) of the outstanding convertible notes
were converted into 705,158 common shares (2008 - $235.7 thousand). Certain
convertible note holders took advantage of a one-time option that arose as a
result of our third quarter 2009 Special Warrant Offering (note 12) to convert
part of the convertible notes at CDN$0.40 (approximately US$0.35) per share as
opposed to the convertible note agreement rate of $0.70 per share. This
conversion resulted in a debt conversion expense of $174.9 thousand, which was
expensed in the third quarter of 2009. This transaction resulted in an aggregate
increase of $428.8 thousand to additional paid-in capital.

On September 22, 2009 the Company
repaid the balance of the convertible notes outstanding of $976.3 thousand and,
consequently, the security against the assets of the Company was released.

F - 17

---

IntelGenx Technologies Corp.

Notes to Consolidated Financial StatementsDecember 31, 2009 and 2008(Expressed in U.S. Funds)

|**10.** | Commitments and Contingency                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        | a) Commitments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        | The Company entered into an agreement to lease premises
      up to August 2009 and subsequently extended the term of the lease until
      August 2010. The future minimum lease payments until expiry of the
      extended lease period are approximately $17.3 thousand.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        | On October 1, 2009, the Company signed two new agreements
      with Little Gem Life Science Partners and SectorSpeak Inc. for investor
      relation services in the U.S.A and in Canada, respectively. As part of the
      terms of these agreements, the Company is required to pay for a period of
      one year $4.5 thousand a month to Little Gem Life Science Partners and
      CDN$5.0 thousand (US$4.8 thousand) a month to Sector Speak Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        | b) Contingency                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        | On August 18, 2009, the Company learned that Cary
      Pharmaceuticals was named in a lawsuit filed by Biovail in the U.S.
      District Court for the District of Delaware for patent infringement under
      the provisions of the Drug Price Competition and Patent Term Restoration
      Act of 1984, known as the "Hatch-Waxman Act," with respect to Biovail's
      U.S. Patent No. 6,096,341. Pursuant to the Hatch-Waxman Act, the filing of
      the patent infringement lawsuit against Cary Pharmaceuticals by Biovail
      instituted an automatic stay of any FDA approval of the NDA until the
      earlier of a judgment or January 3, 2012. The Biovail lawsuit seeks to
      prevent the manufacture or sale of the product during the life of the
      Biovail patent. Although the Company is not a party to the action, any
      decision could have an effect on the Companys potential revenues relating
      to the product. Cary Pharmaceuticals and the Company believe that the
      product does not infringe Biovail's patent and will assert their rights.
      Under the terms of the collaborative agreement the Company may have to
      bear part, or in the case of an unfavorable decision by the courts, all
      costs related to defending the lawsuit. At this point in time, it is not
      feasible to estimate such costs.
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|**11.** | Capital Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         



| |                                                                 |   | 2009 |  |   | 2008 | 
| | --------------------------------------------------------------- | - | ---- |  | - | ---- | 
| | Authorized -                                                    |   |      |  |   |      | 
| |                                                                 |   |      |  |   |      | 
| | 100,000,000 common shares of $0.00001 par
      value           |   |      |  |   |      | 
| | 20,000,000 preferred shares of $0.00001 par value               |   |      |  |   |      | 
| |                                                                 |   |      |  |   |      | 
| | Issued -                                                        |   |      |  |   |      | 
| |                                                                 |   |      |  |   |      | 
| | 33,081,271
      (December 31, 2008 - 20,850,002) common shares | $ | 331  |  | $ | 209  | 

F - 18

---

IntelGenx Technologies Corp.

Notes to Consolidated Financial StatementsDecember 31, 2009 and 2008(Expressed in U.S. Funds)

|11. | Capital Stock (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | On March 27, 2008, as part of a private placement, the
      Company issued 4,001,000 units for gross proceeds of $2,800,700. Each unit
      consists of one common share of the Company and one common share purchase
      warrant. Each warrant entitles the holder to purchase one common share at
      an exercise price of $1.02 per common share and expires 24 months after
      the date of issuance. Proceeds were allocated between the common shares
      and the warrants based on their relative fair value. The common shares
      were recorded at a value of $2,127,960 excluding transaction costs. (See
      note 12 for the portion allocated to the warrants.)
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | The Company paid an agent a cash commission in the amount
      of $196,000, which is equal to 7% of the gross proceeds of the offering
      and issued an agent option entitling the agent to acquire 320,080 units
      (consisting of one common share and one common share purchase warrant) at
      $0.70 per unit, which expire 24 months after the date of issuance. Each
      common share purchase warrant included in the unit entitles the holder to
      purchase one common share at an exercise price of $1.02 per common share
      and expires 24 months after the date of issuance of the unit.                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | In addition, the Company paid approximately $256,000 in
      cash consideration for other transaction costs. All the above transaction
      costs have been reflected as a reduction of the common shares and the
      warrants based on their relative fair values.                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | Pursuant to the terms of the private placement, the
      Company was obliged to use its best efforts to (i) have the common shares
      listed on the TSX Venture Exchange, and (ii) prepare and file with, and
      have declared effective, by the U.S. Securities and Exchange Commission, a
      resale registration statement in respect of the common shares and the
      warrants issued to subscribers as well as those issuable upon exercise of
      the agents warrants, all prior to 4 months after March 27, 2008. All of
      these provisions were satisfied within the required time limits during the
      second quarter of 2008.                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | On April 22, 2008, 100,000 warrants were exercised for
      100,000 common shares having a par value of $1 for cash consideration of
      $41,000, resulting in an increase in additional paid-in capital of
      $40,999.                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | On April 22, 2008, the Company entered into agreements to
      amend the anti-dilution terms of the convertible notes. As consideration
      for entering into this amendment, the Company agreed to issue to the
      holders of the convertible notes an aggregate of 159,456 fully paid common
      shares having a par value of $2 in aggregate, resulting in an increase in
      additional paid-in capital of $111,617.                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | On July 13, 2009, as part of a private placement, the
      Company issued 10,476,000 special warrants for gross proceeds of $3,631.4
      thousand. Each special warrant consists of one common share and one common
      share purchase warrant. Each warrant entitles the holder to purchase one
      common share at an exercise price of $0.80 per common share and expires 36
      months after the date of issuance. Proceeds were allocated between the
      common shares and the warrants based on their relative fair value. The
      common shares were recorded at a value of $2,337.9 thousand. (See note 12
      for the portion allocated to the warrants.)       

F - 19

---

IntelGenx Technologies Corp.

Notes to Consolidated Financial StatementsDecember 31, 2009 and 2008(Expressed in U.S. Funds)

|11. | Capital Stock (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | The Company paid agents a cash commission in the amount
      of $290.5 thousand, which is equal to 8% of the gross proceeds of the
      offering, issued the agents 419,040 common shares of the Company which is
      equal to 4% of the number of special warrants issued in the offering and
      issued agents options entitling the agents to acquire 838,080 units
      (consisting of one common share and one common share purchase warrant) at
      an exercise price of $0.80 per unit, which expire 36 months after the date
      of issuance. Each warrant included in the agents options entitles the
      holder to purchase one common share at an exercise price of $0.80 per
      common share and expires 36 months after the date of issuance of the unit.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | In addition, the Company paid approximately $370.4
      thousand in cash consideration for other transaction costs. All of the
      above transaction costs have been reflected as a reduction to the common
      shares and the warrants based on their relative fair values.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | On July 22, 2009, as part of a private placement, the
      Company issued 350,000 units to investors for gross proceeds of $127.5
      thousand. Each unit consists of one common share and one common share
      purchase warrant. Each warrant entitles the holder to purchase one common
      share at an exercise price of $0.80 per common share and expires 36 months
      after the date of issuance. Proceeds were allocated between the common
      shares and the warrants based on their relative fair values. The common
      shares were recorded at a value of $81.4 thousand. (See note 12 for the
      portion allocated to the warrants.)                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | In addition, the Company paid approximately $9.8 thousand
      in cash consideration for other transaction costs, which have been
      reflected as a reduction of the common shares and the warrants based on
      their relative fair values.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | On September 3, 2009, as part of a private placement, the
      Company issued 250,000 units to investors for gross proceeds of $92.9
      thousand. Each unit consists of one common share and one common share
      purchase warrant. Each warrant entitles the holder to purchase one common
      share at an exercise price of $0.80 per common share and expires 36 months
      after the date of issuance. Proceeds were allocated between the common
      shares and the warrants based on their relative fair value. The common
      shares were recorded at a value of $59.2 thousand. (See note 12 for the
      portion allocated to the warrants.)                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | In addition, the Company paid approximately $7.2 thousand
      in cash consideration for other transaction costs, which have been
      reflected as a reduction of the common shares and the warrants based on
      their relative fair values.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | In the year ended December 31, 2009, 31,071(2008-191,500)
      stock options were exercised for 31,071 common shares having a par value
      of $Nil in aggregate, for cash consideration of $21.8 thousand, resulting
      in an increase in additional paid-in capital of $21.8 thousand.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

F - 20

---

IntelGenx Technologies Corp.

Notes to Consolidated Financial StatementsDecember 31, 2009 and 2008(Expressed in U.S. Funds)

|12. | Additional Paid-In Capital                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | Stock Options                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | In November 2006, the Company adopted the 2006 Stock
      Incentive Plan ("Plan") for the purpose of issuing both Incentive Options
      and Nonqualified Options to officers, employees, directors and eligible
      consultants of the Company. A total of 1,600,749 shares of common stock
      were reserved for issuance under this plan. Options may be granted under
      the Plan on terms and at prices as determined by the Board of Directors
      except that the options cannot be granted at less than 100%, of the fair
      market value of the common stock on the date of the grant. Each option
      will be exercisable after the period or periods specified in the option
      agreement, but no option may be exercised after the expiration of 10 years
      from the date of grant. All options granted to individuals other than non-
      employee directors will have a total vesting period of 24 months from the
      date of grant, with one quarter of the total options granted vesting and
      becoming exercisable every six months. Options granted to non-employees
      will vest and become 100% fully exercisable immediately upon grant.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | At the Annual General Meeting on September 8, 2008 the
      shareholders of the Company approved to amend the 2006 Stock Option Plan
      to increase the number of shares available for issuance under the Plan
      from 1,600,749 to 2,074,000, or 10% of the Companys issued and
      outstanding common shares as of July 28, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | A modification was made to the 2006 Stock Option Plan.
      The life of the options was reduced from 10 years to 5 years to comply
      with the regulations of the TSX-V. Accordingly, because the grant-date
      fair value of the modified options was less than the fair value of the
      original options measured immediately before the modification, no
      incremental share-based compensation expense resulted from the
      modification.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | On March 27, 2008, the Company issued 320,080 agents
      options exercisable into one common share and one stock purchase warrant
      per agents option. The exercise price of the option and the stock
      purchase warrant are $0.70 and $1.02 respectively and they expire on March
      27, 2010. As at December 31, 2008, no agents options had been exercised.
      The agents options were issued as part of the transaction costs in
      connection with the private placement described in note 12. The agents
      options were accounted for at their fair value, as determined by the
      Black-Scholes valuation model, of $95.0 thousand, using the assumptions
      below:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    



| | Expected volatility     | 77%    
| | ----------------------- | -------
| | Expected life           | 2 years
| | Risk-free interest rate | 1.75%  
| | Dividend yield          | Nil    

On May 22, 2008, the Company granted
51,176 stock options to two non-employee directors to purchase common shares.
The stock options are exercisable at $0.85 per share and have a term of 5 years
with immediate vesting provisions. The stock options were accounted for at their
fair value, as determined by the Black-Scholes valuation model, of $21.3
thousand, using the following assumptions:

| | Expected volatility     | 76%      
| | ----------------------- | ---------
| | Expected life           | 2.5 years
| | Risk-free interest rate | 2.70%    
| | Dividend yield          | Nil      

F - 21

---

IntelGenx Technologies Corp.

Notes to Consolidated Financial StatementsDecember 31, 2009 and 2008(Expressed in U.S. Funds)

|12. | Additional Paid-In Capital (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | On May 29, 2008, 400,000 stock options were granted to
      Auctus Capital as compensation for investor relation services. The option
      grant was subject to shareholder approval to increase the number of shares
      to be issued under the stock option plan, which was subsequently given at
      the Annual General Meeting, held on September 8, 2008. The exercise price
      of the options was $1. The options vested based upon a combination of the
      achievement of certain performance conditions and the passage of time. As
      of December 31, 2008, performance conditions had been met for the first
      200,000 options tranche. The first tranche of the 200,000 stock options
      were accounted for at its fair value, as determined by the Black-Scholes
      valuation model, of $86.2 thousand, using the following
  assumptions:



| | Expected volatility     | 75%       
| | ----------------------- | ----------
| | Expected life           | 2.69 years
| | Risk-free interest rate | 2.81%     
| | Dividend yield          | Nil       

As a result of the May 29, 2008 grant,
the Company recorded a compensation expense of $36.0 thousand in the year ended
December 31, 2009 and an expense of $50.4 thousand in the year ended December
31, 2008 for the first tranche of 200,000 options. As at December 31, 2008, it
was not probable that the performance conditions for the second tranche of
200,000 stock options would be achieved and as such no compensation expense was
recognized.

The contract with Auctus Capital was
terminated with effect on May 29, 2009. No options related to the contract with
Auctus Capital had been exercised and all non-exercised options were forfeit
upon contract termination.

On September 8, 2008, the Company
granted 75,000 stock options to a non-employee director to purchase common
shares. The stock options are exercisable at $0.85 per share and have a term of
5 years with immediate vesting provisions. The stock options were accounted for
at their fair value, as determined by the Black-Scholes valuation model, of
$30.4 thousand, using the following assumptions:

| | Expected volatility     | 78%      
| | ----------------------- | ---------
| | Expected life           | 2.5 years
| | Risk-free interest rate | 2.40%    
| | Dividend yield          | Nil      

On September 8, 2008, the Company
granted 100,000 stock options to an officer to purchase common shares. The stock
options are exercisable at $0.85 per share, have a term of 5 years and vest in
equal increments over two years at 25% every six months. The stock options were
accounted for at their fair value, as determined by the Black-Scholes valuation
model, of $39.7 thousand, using the following assumptions:

| | Expected volatility     | 76%      
| | ----------------------- | ---------
| | Expected life           | 3.1 years
| | Risk-free interest rate | 2.49%    
| | Dividend yield          | Nil      

F - 22

---

IntelGenx Technologies Corp.

Notes to Consolidated Financial StatementsDecember 31, 2009 and 2008(Expressed in U.S. Funds)

|12. | Additional Paid-In Capital (Contd)                                                                                                                                                                                                                                                                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                        
|    | On March 11, 2009 the Company granted 25,000 stock
      options to an employee to purchase common shares. The stock options are
      exercisable at $0.31 per share and vest over 2 years at 25% every six
      months. The stock options were accounted for at their fair value, as
      determined by the Black-Scholes valuation model, of $4.4 thousand, using
      the following assumptions:



| | Expected volatility     | 100%     
| | ----------------------- | ---------
| | Expected life           | 3.1 years
| | Risk-free interest rate | 2.49%    
| | Dividend yield          | Nil      

On July 13, 2009 the Company issued
838,080 agents options exercisable into one common share at an exercise price
of $0.80 per share option, which expire on July 13, 2012. The agents options
were issued as part of the transaction costs in connection with the private
placement described in note 6. The agents options were accounted for at their
fair value, as determined by the Black-Scholes valuation model, of $160.7
thousand, using the assumptions below:

| | Expected volatility     | 117%   
| | ----------------------- | -------
| | Expected life           | 3 years
| | Risk-free interest rate | 1.41%  
| | Dividend yield          | Nil    

On October 3, 2009 the Company granted
50,000 stock options to Little Gem Life Science Partners as compensation for
investor relation services. The stock options are exercisable into common shares
at an exercise price of $0.55 per share option, which expire on October 3, 2012.
The stock options vest 50% on the first, and 50% on the second, anniversary of
the agreement. The stock options were accounted for at their fair value, as
determined by the Black-Scholes valuation model, of $16.7 thousand, using the
assumptions below:

| | Expected volatility     | 132%      
| | ----------------------- | ----------
| | Expected life           | 1.75 years
| | Risk-free interest rate | 0.71%     
| | Dividend yield          | Nil       

On November 24, 2009, the Company
granted 25,000 stock options to each of a director and to an officer to purchase
common shares. The stock options are exercisable at $0.61 per share, have a term
of 5 years and vest in equal increments over two years at 25% every six months.
The stock options were accounted for at their fair value, as determined by the
Black-Scholes valuation model, of $21.0 thousand, using the following
assumptions:

| | Expected volatility     | 113%     
| | ----------------------- | ---------
| | Expected life           | 3.1 years
| | Risk-free interest rate | 1.22%    
| | Dividend yield          | Nil      

F - 23

---

IntelGenx Technologies Corp.

Notes to Consolidated Financial StatementsDecember 31, 2009 and 2008 
(Expressed in U.S. Funds)

|12. | Additional Paid-In Capital (Contd)                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | On November 24, 2009, the Company granted 75,000 stock
      options to three non-employee directors to purchase common shares. The
      stock options are exercisable at $0.61 per share and have a term of 5
      years with immediate vesting provisions. The stock options were accounted
      for at their fair value, as determined by the Black-Scholes valuation
      model, of $29.3 thousand, using the following
  assumptions:



| | Expected volatility     | 123%     
| | ----------------------- | ---------
| | Expected life           | 2.5 years
| | Risk-free interest rate | 0.98%    
| | Dividend yield          | Nil      

Information with respect to stock
option activity for 2008 and 2009 is as follows:

| |                                 |  |                   |   |  | Weighted average |  
| | ------------------------------- |  | ----------------- | - |  | ---------------- | -
| |                                 |  | Number of options |   |  | exercise price   |  
| |                                 |  |                   |   |  | $                |  
| |                                 |  |                   |   |  |                  |  
| | Outstanding  January 1, 2008   |  | 1,376,500         |   |  | 0.55             |  
| |                                 |  |                   |   |  |                  |  
| | Granted                         |  | 626,176           |   |  | 0.95             |  
| | Forfeited                       |  | (50, 000          | ) |  | (0.97            | )
| | Expired                         |  | (62,500           | ) |  | (1.15            | )
| | Exercised                       |  | (191,500          | ) |  | (0.46            | )
| |                                 |  |                   |   |  |                  |  
| | Outstanding  December 31, 2008 |  | 1,698,676         |   |  | 0.70             |  
| |                                 |  |                   |   |  |                  |  
| | Granted                         |  | 200,000           |   |  | 0.56             |  
| | Forfeited                       |  | (200, 000         | ) |  | (1.00            | )
| | Expired                         |  | (319,517          | ) |  | (0.97            | )
| | Exercised                       |  | (31,071           | ) |  | (0.70            | )
| |                                 |  |                   |   |  |                  |  
| | Outstanding  December 31, 2009 |  | 1,348,088         |   |  | 0.56             |  

F - 24

---

IntelGenx Technologies Corp.

Notes to Consolidated Financial StatementsDecember 31, 2009 and 2008(Expressed in U.S. Funds)

|12. | Additional Paid-In Capital (Contd)                                               
|--- | ----------------------------------------------------------------------------------
|    |                                                                                   
|    | Details of stock options outstanding as at December 31,
      2009 are as follows:



Outstanding
        options
      
      
      Exercisable
        optionsWeighted
      
      
      
      
      
      
      
      
      WeightedWeighted average
      
      
      average
      
      
      
      
      
      
      
      
      averageExercise
      
      Number of
      
      
      remaining
      
      
      exercise
      
      
      Aggregate
      
      
      Number of
      
      
      exercise
      
      
      Aggregateprices
      
      options
      
      
      contractual life
      
      
      price
      
      
      intrinsic
      
      
      options
      
      
      price
      
      
      intrinsic$
      
      
      
      
      (years)
      
      
      $
      
      
      value $
      
      
      
      
      
      $
      
      
      value $0.41
      
      800,000
      
      
      1.88
      
      
      0.41
      
      
      
      
      
      800,000
      
      
      0.410.31-0.61
      
      200,000
      
      
      3.98
      
      
      0.56
      
      
      
      
      
      131,250
      
      
      0.570.70-0.85
      
      240,588
      
      
      3.60
      
      
      0.83
      
      
      
      
      
      190,588
      
      
      0.821.15
      
      107,500
      
      
      2.58
      
      
      1.15
      
      
      
      
      
      107,500
      
      
      1.151,348,088
      
      
      2.55
      
      
      0.56
      
      
      180,500
      
      
      1,229,338
      
      
      0.56
      
      
      174,188


Stock-based compensation expense
recognized in 2009 in regards to the stock options was $104.4 thousand (2008 -
$161.0 thousand). As of December 31, 2009, total unrecognized compensation
expense related to unvested stock options was $49.8 thousand (2008 - $83.2
thousand). This amount is expected to be recognized as an expense over a period
of two years. A change in control of the Company due to acquisition would cause
the vesting of these stock options to accelerate and would result in this amount
being charged to stock-based compensation expense.

Warrants

On March 19, 2008, the Company restated
the exercise price of the warrants initially issued with respect to the
convertible notes transaction on May 22, 2007 from $1.02 to $0.80. This
modification was treated as an exchange of the original warrant for a new
warrant in accordance to FASB ASC 505-50 Equity-Based Payments to
Non-Employees. This resulted in an increase in fair value of the warrants of
$92.6 thousand. This increase was recorded as an additional compensation expense
and a corresponding increase in additional paid-up capital.

On March 27, 2008, the Company issued
4,001,000 stock purchase warrants exercisable into common shares at $1.02 per
share which expire on March 27, 2010. The stock purchase warrants were issued in
connection with a private placement. The stock purchase warrants were valued at
$672.7 thousand, before transaction costs, based on their relative fair value,
as determined by the Black-Scholes valuation model using the assumptions below:

F - 25

---

IntelGenx Technologies Corp.

Notes to Consolidated Financial StatementsDecember 31, 2009 and 2008(Expressed in U.S. Funds)

|12. | Additional Paid-In Capital
  (Contd)
|--- | -------------------------------------



| | Expected volatility     | 77%    
| | ----------------------- | -------
| | Expected life           | 2 years
| | Risk-free interest rate | 1.75%  
| | Dividend yield          | Nil    

As at March 31, 2008, 5,186 shares of
common stock were issued as a result of the cashless exercise of 10,638 warrants
with an exercise price of $0.41 and a fair value of $0.80. On April 22, 2008,
$100.0 thousand warrants were exercised for 100,000 common shares having a par
value of $1 for cash consideration of $41.0 thousand, resulting in an increase
in additional paid-in capital of $41.0.

On July 13, 2009 the Company issued
10,476,000 stock purchase warrants exercisable into common shares at $0.80 per
share which expire on July 13, 2012. The stock purchase warrants were issued in
connection with the July 13, 2009 private placement described in note 11. The
stock purchase warrants were valued at $1,293.5 thousand based on their relative
fair value, as determined by the Black-Scholes valuation model using the
assumptions below:

| | Expected volatility     | 117%   
| | ----------------------- | -------
| | Expected life           | 3 years
| | Risk-free interest rate | 1.41%  
| | Dividend yield          | Nil    

On July 22, 2009 the Company issued
350,000 stock purchase warrants exercisable into common shares at $0.80 per
share which expire on July 22, 2012. The stock purchase warrants were issued in
connection with the July 22, 2009 private placement described in note 11. The
stock purchase warrants were valued at $46.1 thousand based on their relative
fair value, as determined by the Black-Scholes valuation model using the
assumptions below:

| | Expected volatility     | 117%   
| | ----------------------- | -------
| | Expected life           | 3 years
| | Risk-free interest rate | 1.50%  
| | Dividend yield          | Nil    

F - 26

---

IntelGenx Technologies Corp.

Notes to Consolidated Financial StatementsDecember 31, 2009 and 2008(Expressed in U.S. Funds)

|12. | Additional Paid-In Capital (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | On September 3, 2009 the Company issued 250,000 stock
      purchase warrants exercisable into common shares at $0.80 per share which
      expire on September 3, 2012. The stock purchase warrants were issued in
      connection with the September 3, 2009 private placement described in note
      11. The stock purchase warrants were valued at $33.7 thousand based on
      their relative fair value, as determined by the Black-Scholes valuation
      model using the assumptions below:



| | Expected volatility     | 117%   
| | ----------------------- | -------
| | Expected life           | 3 years
| | Risk-free interest rate | 1.42%  
| | Dividend yield          | Nil    

As at December 31, 2009, no additional
stock purchase warrants had been exercised.

Information with respect to warrant
activity for 2008 and 2009 is as follows:

| |                                                      |  | Number of  |   |  | Weighted average |  
| | ---------------------------------------------------- |  | ---------- | - |  | ---------------- | -
| |                                                      |  | warrants   |   |  | exercise price   |  
| |                                                      |  |            |   |  | $                |  
| |                                                      |  |            |   |  |                  |  
| | Outstanding  January 1, 2008                        |  | 2,547,834  |   |  | 0.97             |  
| |                                                      |  |            |   |  |                  |  
| | Attached to private placement                        |  | 4,001,000  |   |  | 1.02             |  
| | Issued to agent                                      |  | 320,080    |   |  | 1.02             |  
| | Re-pricing - Cancellation of
      original warrants |  | (2,142,857 | ) |  | (1.02            | )
| | Re-Issue
      of Warrants                           |  | 2,142,857  |   |  | 0.80             |  
| | Expired                                              |  | (80,053    | ) |  | (0.41            | )
| | Exercised                                            |  | (110,638   | ) |  | (0.41            | )
| |                                                      |  |            |   |  |                  |  
| | Outstanding - December 31, 2008                      |  | 6,678,223  |   |  | 0.95             |  
| |                                                      |  |            |   |  |                  |  
| | Attached to private placements                       |  | 11,076,000 |   |  | 0.80             |  
| | Issued to agents                                     |  | 838,080    |   |  | 0.80             |  
| |                                                      |  |            |   |  |                  |  
| | Outstanding - December 31, 2009                      |  | 18,592,303 |   |  | 0.85             |  

F - 27

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IntelGenx Technologies Corp.

Notes to Consolidated Financial StatementsDecember 31, 2009 and 2008(Expressed in U.S. Funds)

|13. | Income Taxes                                                                                                                        
|--- | ------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                     
|    | Income taxes reported differ from the amount computed by
      applying the statutory rates to losses. The reasons are as
  follows:



| |                                                                         |   | 2009   |   |   | 2008   |  
| | ----------------------------------------------------------------------- | - | ------ | - | - | ------ | -
| | Statutory income taxes                                                  | $ | (692.0 | ) | $ | (944.0 | )
| | Net operating losses for which no tax
      benefits have been recorded |   | 265.0  |   |   | 567.0  |  
| | Excess of amortization over
      capital cost allowance                |   | 15.0   |   |   | 17.0   |  
| | Non-deductible expenses                                                 |   | 213.0  |   |   | 185.0  |  
| | Undeducted research and
      development expenses                      |   | 297.0  |   |   | 441.0  |  
| | Tax deductible portion of transaction costs                             |   | (36.0  | ) |   | (37.0  | )
| | Investment tax credit                                                   |   | (62.0  | ) |   | (181.0 | )
| | Unrealized foreign exchange gain                                        |   | -      |   |   | (48.0  | )
| | Amortization of convertible debt discount                               |   | (130.3 | ) |   | (151.7 | )
| |                                                                         |   |        |   |   |        |  
| |                                                                         | $ | (130.3 | ) | $ | (151.7 | )

The major components of the deferred
tax assets classified by the source of temporary differences are as follows:

| |                                                    |   | 2009     |   |   | 2008     |  
| | -------------------------------------------------- | - | -------- | - | - | -------- | -
| | Property and equipment                             | $ | (18.0    | ) | $ | (12.0    | )
| | Net operating losses carryforward                  |   | 672.0    |   |   | 838.0    |  
| | Undeducted research and
      development expenses |   | 431.0    |   |   | 518.0    |  
| | Non-refundable tax credits carryforward            |   | 409.0    |   |   | 237.0    |  
| | Transaction costs to be deducted in future years   |   | 36.0     |   |   | 73.0     |  
| |                                                    |   |          |   |   |          |  
| |                                                    |   | 1,530.0  |   |   | 1,654.0  |  
| |                                                    |   |          |   |   |          |  
| | Valuation allowance                                |   | (1,530.0 | ) |   | (1,654.0 | )
| |                                                    |   |          |   |   |          |  
| |                                                    | $ | -        |   | $ | -        |  

The valuation allowance at December 31,
2008 was $1,654 thousand. The net change in the valuation allowance during the
period ended December 31, 2009, was a decrease of $124 thousand. In assessing
the realizability of deferred tax assets, management considers whether it is
more likely than not that some portion or all of the deferred income tax assets
will not be realized. The ultimate realization of deferred income tax assets is
dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible. Management considers the
scheduled reversal of deferred income tax liabilities, projected future taxable
income, and tax planning strategies in making this assessment. Based on
consideration of these items, management has determined that enough uncertainty
exists relative to the realization of the deferred income tax asset balances to
warrant the application of a full valuation allowance as of December 31, 2009.

F - 28

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IntelGenx Technologies Corp.

Notes to Consolidated Financial StatementsDecember 31, 2009 and 2008 
(Expressed in U.S. Funds)

|13. | Income Taxes (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | There were Canadian and provincial net operating losses
      of approximately $3,505 thousand (2008 - $2,585.0 thousand) and $3,380
      thousand (2008 - $2,702 thousand) respectively, that 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. A portion of the net operating losses may expire before they
      can be utilized.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | As at December 31, 2009, the Company had non-refundable
      tax credits of $430 thousand (2008 -$237 thousand) of which 24 thousand is
      expiring in 2017, 213 thousand is expiring in 2018 and 193,000 is expiring
      in 2019 and undeducted research and development expenses of $2,235
      thousand (2008 - $1,548 thousand) with no expiration date.                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | The deferred tax benefit of these items was not
      recognized in the accounts.                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | Deferred Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | The balance of deferred income taxes liability reported
      in the previous year represented the tax effect of the convertible debt
      arising from the difference between the convertible debts basis for
      accounting purposes and that for income tax purposes and it was charged to
      additional paid-in capital. As the convertible debt was repaid during this
      year, the deferred tax liability was reversed.                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | Unrecognized Tax Benefits                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | The Company does not expect its unrecognized tax benefits
      to change significantly over the next twelve months.                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | Classification of Interest and Penalties                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | Additionally, FIN 48 requires the Company to accrue
      interest and related penalties, if applicable, on all tax positions for
      which reserves have been established consistent with jurisdictional tax
      laws.                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | The interest and penalties as of December 31, 2009 and
      for the years ended December 31, 2009 and 2008 were $Nil.                                                                                                                                                                                                                                                                                                                                                           

F - 29

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IntelGenx Technologies Corp.

Notes to Consolidated Financial StatementsDecember 31, 2009 and 2008(Expressed in U.S. Funds)

|13. | Income Taxes (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | Tax Years and Examination                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | The Company files tax returns in each jurisdiction in
      which it is registered to do business. For each jurisdiction a statute of
      limitations period exists. After a statute of limitations period expires,
      the respective tax authorities may no longer assess additional income tax
      for the expired period. Similarly, the Company is no longer eligible to
      file claims for refund for any tax that it may have overpaid. The
      following table summarizes the Companys major tax jurisdictions and the
      tax years that remain subject to examination by these jurisdictions as of
      December 31, 2009:



Tax
      Jurisdictions
    
    Tax YearsFederal - Canada
    
    2005 and onwardProvincial - Quebec
    
    2005 and onward




|14. | Statement of Cash Flows
  Information
|--- | -------------------------------------



| | In US$
      thousands                                          |   | 2009   |   |   | 2008   |  
| | --------------------------------------------------------------- | - | ------ | - | - | ------ | -
| |                                                                 |   |        |   |   |        |  
| | Accounts receivable                                             | $ | (301.1 | ) | $ | 110.4  |  
| | Prepaid expenses                                                |   | (3.2   | ) |   | (21.5  | )
| | Investment tax credits receivable                               |   | (242.6 | ) |   | (15.1  | )
| | Accounts payable
      and accrued liabilities                  |   | 178.7  |   |   | 264.2  |  
| |                                                                 |   |        |   |   |        |  
| | Changes in
      non-cash operating elements of working capital | $ | (368.2 | ) | $ | (338.0 | )
| |                                                                 |   |        |   |   |        |  
| | Additional Cash Flow Information:                               |   |        |   |   |        |  
| |                                                                 |   |        |   |   |        |  
| | Interest paid                                                   | $ | 69.1   |   | $ | 189.9  |  



|15. | Related Party Transactions                                                                                                                                                                                                                                                                                                                                                                   
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                              
|    | During the year, the Company incurred expenses of
      approximately $17.8 thousand (2008 - $18.9 thousand) for laboratory
      equipment leased from a shareholder, who is also an officer of the
      Company, and $4.9 thousand (2008 - $5.6 thousand) for interest on the loan
      payable, shareholder.                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                              
|    | Included in management salaries are $20.3 thousand (2008
      - $20.2 thousand) for options granted to the Chief Financial Officer and
      $0.4 thousand (2008 - $Nil) for options granted to the Chief Executive
      Officer under the 2006 Stock Option Plan and $29.3 thousand (2008 - $51.7
      thousand) for options granted to non-employee directors in November of
      2009.
|    |                                                                                                                                                                                                                                                                                                                                                                                              
|    | Included in general and administrative expenses are
      director fees of $28.1 thousand (2008-$Nil) for attendance to board
      meetings and audit committee meetings.                                                                                                                                                                                                                   

F - 30

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IntelGenx Technologies Corp.

Notes to Consolidated Financial StatementsDecember 31, 2009 and 2008(Expressed in U.S. Funds)

|15. | Related Party Transactions (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | Included in accounts payable and accrued liabilities is
      approximately $12.1 thousand (2008 - $13.4 thousand) payable to
      shareholders, who are also officers of the Company and a cash retainer
      amounting to $Nil (2008 - $17.9 thousand) payable to a director.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | 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 notes have
      been excluded from the calculation of diluted loss per share since they
      are anti-dilutive.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|17. | Subsequent Events                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | On January 22, 2010, the Company granted 50,000 stock
      options to SectorSpeak Inc. as compensation for investor relation
      services. The stock options are exercisable into common shares at an
      exercise price of CAD$0.50 per share option and expire on January 22,
      2013. The stock options vest 50% on the first, and 50% on the second,
      anniversary of the agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | On March 4, 2010 the Company, together with Cannasat
      Therapeutics Inc. announced that they have entered into a Letter of Intent
      (LOI) under which IntelGenx would acquire a fifty percent ownership
      stake from Cannasat and an exclusive worldwide license to develop and
      commercialize Relivar, a novel formulation of dronabinol, utilizing
      IntelGenxs proprietary mucoadhesive AdVersa technology, for the treatment
      of various diseases including neuropathic pain. The LOI details the terms
      under which the two parties will negotiate an exclusive worldwide license
      that should result in IntelGenx assuming sole product development and
      corresponding funding as well as commercialization rights for Relivar. The
      LOI also lays out the terms for shared milestones and royalties generated
      by sublicensing of Relivar to a potential pharmaceutical marketing partner
      in the future. Upon completing a definitive license agreement, IntelGenx
      would forgive approximately CAD$231,000 of debt owed by Cannasat. A
      definitive license agreement would be subject to board approval of each
      company.

F - 31

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