UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 2024
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission file number: 001-41106
Incannex Healthcare Inc.
(Exact name of registrant as specified in its charter)
Suite 105, 8 Century Circuit Norwest, NSW 2153 Australia 2153
(Address of principal executive offices) (Zip Code)
+61409 840 786
(Registrant’s telephone number, including
area code)
Securities registered pursuant to Section 12(b)
of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, $0.0001 par value per share IXHL The Nasdaq Global Market
Securities registered pursuant to Section 12(g)
of the Act: None
Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐No☒
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☒
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☒ No ☐
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes☒ No ☐
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.
See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”
and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company ☒
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report. ☐
If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s
executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐
No ☒
The aggregate market value of the registrant’s
voting and non-voting stock held by non-affiliates of the registrant (without admitting that any person whose shares are not included
in such calculation is an affiliate) computed by reference to the closing price of $4.64 of the common stock on the Nasdaq Global Market
as of December 29, 2023, was approximately $64.0 million. The calculation of the aggregate market value of the voting and non-voting
common equity held by non-affiliates of the registrant excludes shares of common stock held by each officer, director and stockholder
that the registrant concluded were affiliates on that date. This determination of affiliate status is not necessarily a conclusive determination
for other purposes.
As of August 30, 2024, there were 17,642,832 shares
of the registrant’s common stock issued and outstanding.
TABLE OF CONTENTS
Page
PART I 1
Item 1. Business 1
Item 1A. Risk Factors 35
Item 1B. Unresolved Staff Comments 75
Item 1C. Cybersecurity 76
Item 2. Properties 77
Item 3. Legal Proceedings 77
Item 4. Mine Safety Disclosures 77
Item 6. [Reserved] 78
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 86
Item 8. Financial Statements and Supplementary Data F-1
Item 9A. Controls and Procedures 87
Item 9B. Other Information 88
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 88
PART III 89
Item 10. Directors, Executive Officers and Corporate Governance 89
Item 11. Executive Compensation 92
Item 14. Principal Accountant Fees and Services 103
Item 15. Exhibits and Financial Statement Schedules 104
i
Trademarks
We own or have rights to trademarks and trade names that we use in
connection with the operation of our business, including our corporate name, logos, product names and website names. Solely for your convenience,
some of the trademarks and trade names referred to in this annual report on Form 10-K for the fiscal year ended June 30, 2024 (“Annual
Report”) are listed without the ® and TM symbols, but we will assert, to the fullest extent
under applicable law, our rights to our trademarks and trade names.
Statistical
and Other Industry and Market
Data
This Annual Report includes statistical and other
industry and market data and contains estimates and information concerning our industry and our business, including estimated market size
and projected growth rates of the markets for our drug candidates. Unless otherwise expressly stated, we obtained this industry, business,
market, medical and other information from reports, research surveys, studies and similar data prepared by third parties, industry, medical
and general publications, government data and similar sources.
This information involves a number of assumptions
and limitations. Although we are responsible for all of the disclosure contained in this Annual Report and we believe the third-party
market position, market opportunity and market size data included in this Annual Report are reliable, we have not independently verified
the accuracy or completeness of this third-party data. In addition, projections, assumptions and estimates of our future performance and
the future performance of the industry in which we operate are necessarily subject to a high degree of uncertainty and risk due to a variety
of factors, including those described in “Risk Factors.” These and other factors could cause results to differ materially
from those expressed in these publications and reports.
Special Note Regarding Forward-Looking Statements
This Annual Report contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act’), and Section 21E of the
Securities Exchange Act of 1934, as amended, (the “Exchange Act”) adopted pursuant to the Private Securities Litigation Reform
Act of 1995. All statements other than statements of historical facts contained in this Annual Report, including statements regarding
our future results of operations, financial condition, business strategy and plans and objectives of management for future operations,
are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,”
“believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,”
“intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,”
“target,” “will,” or “would,” or the negative of these words or other similar terms or expressions.
We have based these forward-looking statements
largely on our current expectations and projections about future events and trends that we believe may affect our financial condition,
results of operations, business strategy and financial needs. These forward-looking statements are subject to a number of known and unknown
risks, uncertainties, other factors and assumptions, including the risks described in “Risk Factors” and elsewhere in this
Annual Report, regarding, among other things:
● estimates regarding market size and related future growth rates;
ii
● our ability to commercialize drug candidates and to generate revenues;
● any statement of assumptions underlying any of the foregoing.
These risks are not exhaustive. Other sections
of this Annual Report may include additional factors that could harm our business and financial performance.
You should not rely on forward-looking statements
as predictions of future events. We have based the forward-looking statements contained in this Annual Report primarily on our current
expectations and projections about future events and trends that we believe may affect our business, financial condition and operating
results. We undertake no obligation to update any forward-looking statements made in this Annual Report to reflect events or circumstances
after the date of this Annual Report or to reflect new information or the occurrence of unanticipated events, except as required by law.
We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place
undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions,
mergers, dispositions, joint ventures or investments.
In addition, statements that “we believe”
and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to
us as of the date of this Annual Report. While we believe that information provides a reasonable basis for these statements, that information
may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review
of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.
We qualify all our forward-looking
statements by these cautionary statements.
As used in this Annual Report,
unless otherwise stated or the context otherwise indicates, references to “Incannex,” the “Company,” “we,”
“our,” “us” or similar terms refer to Incannex Healthcare Inc., and our wholly-owned subsidiaries.
iii
PART I
Item 1. Business
Overview
We are a clinical-stage biopharmaceutical company
dedicated to developing innovative medicines for patients living with serious chronic diseases and significant unmet needs. Our lead drug
candidates are currently in Phase 2/3 and Phase 2 clinical development.
IHL-42X, our drug candidate in a pivotal Phase
2/3 for the treatment of obstructive sleep apnea (“OSA”) is an oral fixed dose combination of dronabinol and acetazolamide
designed to act synergistically, targeting two different physiological pathways associated with the intermittent hypoxia and hypercapnia
that characterize OSA. In a proof-of-concept Australian Phase 2 clinical trial, we observed that IHL-42X reduced apnea hypopnea index
(“AHI") and was well tolerated in OSA patients. The ongoing Phase 2/3 clinical trial further investigates the safety and efficacy
of IHL-42X for the treatment of OSA. The Phase 2 portion is being conducted in the United States, and the expanded Phase 3 portion will
include the United Kingdom and European Union. We expect to report top-line data from the Phase 2 portion this pivotal U.S. Phase 2/3
clinical trial in the first half of 2025 and to release top-line results from our pharmacokinetic and safety study in 2024.
PSX-001, our drug candidate in Phase 2b clinical
development, is an oral synthetic psilocybin treatment, administered in combination with psychological therapy for patients with moderate-to-severe
generalized anxiety disorder (“GAD”). We completed a proof-of-concept clinical trial, known as PsiGAD1, in the top-line results
of which we observed that the combination of synthetic psilocybin with psychotherapy significantly reduced anxiety scores and was well
tolerated in GAD patients. We have received clearance of an Investigational New Drug (“IND”) application from the U.S. Food
and Drug Administration (“FDA”) to conduct a Phase 2b clinical trial to further investigate the safety and efficacy of PSX-001
for treatment of GAD. We anticipate reporting full data results from PsiGAD1 in the first half of 2025.
IHL-675A is our drug candidate in an ongoing Australian
Phase 2 trial for the treatment of inflammatory conditions, with an initial focus on rheumatoid arthritis (“RA”). IHL-675A
is an oral fixed dose combination of cannabidiol and hydroxychloroquine sulfate designed to target two different pathways, acting synergistically
to alleviate inflammation. In our Phase 1 clinical trial, IHL-675A was observed to be well-tolerated and bioavailable. In preclinical
studies, IHL-675A was observed to reduce inflammatory markers and disease scores across multiple animal inflammatory disease models and
in vitro assays. The Phase 2 trial is investigating the safety and efficacy of IHL-675A in rheumatoid arthritis patients. We anticipate
reporting top-line data from this Phase 2 trial in the second half of 2025.
Each of these programs could offer a new approach
to treat serious conditions that currently have limited, inadequate, or no approved pharmaceutical treatment options.
Our Strategy
Our mission is to advance novel therapies, leveraging
evidence-based innovation, with the potential to transform the lives of people suffering from serious, chronic conditions and unmet medical
needs. Our three lead programs were created internally and prioritized based on their potential to offer new therapeutic approaches and
long-term patient benefits.
We aim to maximize value to our shareholders and
to provide important new treatment options to patients in need of new therapeutic options. Key elements of our strategy include:
1
Lead Drug Candidates
2
The estimated addressable global market opportunity
for OSA is approximately US$8.2 billion, with an estimated compound annual growth rate (“CAGR”) for the global market of OSA
devices from 2024 to 2029 of 7.33%. Sales for the treatment of in GAD in the United States reached approximately US$21 billion in 2023.
The rheumatoid arthritis market in the United States is growing rapidly with sales for rheumatoid arthritis treatments reaching US$25.37
billion in 2023. This market is expected to exceed US$31.58 billion by 2033. We believe that our leading drug candidate, IHL-675A, also
has the potential for use in other anti-inflammatory conditions, such as inflammatory bowel disease and pulmonary inflammatory diseases
like chronic obstructive pulmonary disease (“COPD”) and asthma. Sales for these other inflammatory conditions in the United
States totaled US$3.6 billion in 2022.
Clinical Approach
In our internal research and collaborative efforts
with leading medical institutions in Australia, we identified significant untapped opportunities to pursue combination strategies targeting
synthetic cannabinoid and psychedelics agents to develop innovative therapeutics that target unmet medical needs. The combination strategy
allows for the reduction of dose from that required when the drugs are used as monotherapies, which in turn reduces the likelihood of
unwanted side effects.
In our IHL-42x and IHL-675A programs, we are developing oral fixed
drug combinations where the two active agents target different components of the pathophysiology of the disease. Having two drugs with
independent mechanisms of action increases the likelihood of the drugs having a synergistic effect on the disease, such that the effect
of the two drugs in combination is greater than would be predicted based on their activity as monotherapies. We have generated clinical
data supporting promising synergistic advantages in combining agents in our IHL-42x and IHL-675A programs.
Our psilocybin treatment comprises administration
of PSX-001 with psychological support from trained therapists. There is accumulating evidence that psilocybin may have beneficial effects
on a number of mental health conditions. Furthermore, psilocybin in combination with psychological support is thought to optimize therapeutic
outcomes and enhance safety. We believe the combination of synthetic psilocybin and psychotherapy has the potential to offer the greatest
benefit to patients.
The drug development and regulatory strategies
underpinning our lead cannabinoid programs allow us to pursue the FDA’s 505(b)(2) pathway. A major potential advantage of this strategy
is that the nonclinical toxicology data package that is normally required before testing new drugs in humans may already be established
for our drug candidates. To the extent the FDA deems that there is sufficient preclinical evidence of safety and efficacy, this streamlined
pathway could substantially reduce the time from drug concept to in-human clinical trials.
Initial preclinical and clinical development of
our lead drug candidates was completed for the most part in Australia, which allowed for efficient execution, improved economics, and
access to the Australian government R&D rebate program. With rigorous preclinical, bioavailability, early clinical safety and efficacy
work conducted in Australia, we believe we are well-positioned to file the third of our U.S. Investigational New Drug (“IND”)
applications with the FDA. We may at times choose to conduct certain smaller studies in Australia, based on economics and speed, to generate
data that further supports our INDs.
IHL-42X
Obstructive Sleep Apnea or “OSA”
OSA is a disease of sleep disordered breathing
characterized by a narrow or collapse of the upper airway during sleep, which interferes with breathing and reduces sleep quality. Presentation
of OSA often includes snoring and waking up gasping for air. Though OSA is recognized as a relatively common and chronic disorder, it
remains underdiagnosed and inadequately treated. Untreated OSA is associated with a wide range of serious long-term outcomes, including
cardiovascular disease, cognitive impairments such as memory loss, poor concentration and judgment, depression and increased risk of death
or injury due to traffic accidents resulting from excessive daytime sleepiness. The substantial patient and society costs related to undiagnosed
and diagnosed obstructive OSA include increased healthcare usage, reduced productivity, and diminished quality of life.
3
A 2019 article published by The Lancet premised
on literature-based analysis of 17 studies across 16 countries, estimated that OSA affects some 936 million adults worldwide. This alarming
statistic is thought to be increasing due to the growing prevalence of obesity and an aging global population. Many people with OSA develop
high blood pressure (hypertension), which can increase the risk of cardiovascular disease. Obstructive sleep apnea is considered a serious
medical condition; the more severe the OSA, the greater the risk of coronary artery disease, heart attack, heart failure, stroke and shortened
life span.
There are no currently approved drugs for the treatment
of OSA. Available treatment options include: the standard of care, positive airway pressure (“PAP”), including continuous
positive airway pressure (“CPAP”), in which an external device pneumatically splints the airway open to prevent disruptions
in breathing; oral appliances to advance the mandible or to retain the tongue, putting the mouth in a position more conducive to breathing;
surgery to remove physical obstructions to airflow; and implantable electronic stimulators to activate muscles at the base of the tongue,
opening the airway in synchrony with respiration. An estimated 50% of patients discontinue CPAP treatment within one year. Patient compliance
to PAP devices is low due to discomfort and claustrophobia resulting from pressurized air being pumped into the patient’s nose and/or
mouth via a mask or nasal pillow during sleep. These available treatment options, in many cases, are poorly tolerated, inadequate, expensive,
and for implantable stimulators and surgery, invasive.
Despite these discomforts, the global annual market
for sleep apnea devices is over US$8.2 billion and growing. The estimated compound annual growth rate for the global market of OSA devices
from 2024 to 2029 is 7.33%.
IHL-42X in OSA
IHL-42X is an oral fixed dose combination of acetazolamide, a carbonic
anhydrase inhibitor approved for various indications, and dronabinol, a synthetic form of delta-9-tetrahydrocannabinol (“THC”)
approved for the treatment of nausea, vomiting and loss of appetite. Both agents have been shown in clinical studies to reduce the apnea
hypopnea index (“AHI”). We believe that the activity of dronabinol on cannabinoid receptors causes dilation of the airway,
and acetazolamide induces modest metabolic acidosis, signaling to the body that there is excess CO2 in the blood, thus increasing respiration.
By combining two agents with mechanisms known to reduce AHI in one pharmaceutical formulation, we believe IHL-42X may have therapeutic
benefit at lower doses of each constituent drug that are safe and tolerable.
Phase 2 Clinical Trial for IHL-42X for OSA
We completed a Phase 2 clinical trial in Australia
to investigate the safety and efficacy of IHL-42X for the treatment of OSA. This study established proof-of-concept, the combination reduced
AHI in patients with OSA.
The primary endpoint of this Australian Phase 2
clinical trial was the change in AHI relative to baseline, and the secondary endpoints included change in oxygen desaturation index (“ODI”),
daytime somnolence measured by the Epworth Sleepiness Scale, improvement in mood as measured by the Profile of Moods State (“POMS”),
and well-being as measured by the Short Form 36. Safety of the IHL-42X combination was assessed through adverse event (“AE”)
monitoring. Participants completed a single-blind placebo treatment period followed by three double-blind IHL-42X treatment periods, each
with a different dose strength of IHL-42X. Each treatment period was seven days with an overnight sleep study on night seven to determine
AHI and other secondary endpoint data. Blood samples were collected the morning after the sleep study and analyzed for THC content.
In the final analysis of data from this trial,
IHL-42X was observed to reduce AHI at all three dose strengths (2.5 mg dronabinol + 125 mg acetazolamide, 5 mg dronabinol + 250 mg acetazolamide,
and 10 mg dronabinol + 500 mg acetazolamide with the lowest dose (2.5 mg dronabinol + 125 mg acetazolamide )) observed to be the most
effective, reducing AHI by an average of 50.7 % relative to baseline with 25% of subjects’ AHI reduced by >80%. With low-dose
IHL-42X, THC was cleared below the common threshold for impaired driving (1 ng/mL) by the morning after dosing. Subjects also reported
improved sleep quality during IHL-42X treatment periods compared to placebo.
IHL-42X was observed to be generally well-tolerated
with no serious adverse events observed at any dosage level. Adverse events (“AEs”) were recorded from the time the subjects
enrolled in the trial until their end-of-study visit. After recording treatment emergent adverse events (“TEAE”), the study
team, including investigators and medical monitors, reviewed the TEAEs to determine whether they were likely related to the drug candidate.
Of the 11 subjects studied, TEAEs deemed to be possibly, probably, or related to study treatment occurred at a higher incidence at the
higher doses on dronabinol/acetazolamide (5 mg dronabinol plus 250 mg acetazolamide and 10 mg dronabinol plus 500 mg acetazolamide) compared
to the low (2.5 mg dronabinol plus 125 mg acetazolamide) dose and placebo treatment periods.
4
Low dose IHL-42X had a similar proportion of subjects
reporting TEAEs and a lower number of total TEAEs than the placebo. This indicated that low-dose IHL-42X was well-tolerated.
This Phase 2 clinical trial both supported our
FDA IND submission and informed the design of the ongoing FDA pivotal Phase 2/3 clinical trial (or the Re-POSA Study, as discussed below).
Formulation Development and Manufacturing of IHL-42X
We engaged Procaps Group, S.A. (“Procaps”) for the manufacture
of a specific oral fixed dose formulation of IHL-42X that is now being tested in our clinical trials.
Bioavailability/Bioequivalence Clinical Trial
We are conducting a bioequivalence/bioavailability
(“BA/BE”) clinical trial for IHL-42X. The BA/BE study focuses on assessing the PK and tolerability of IHL-42X’s active
pharmaceutical ingredients (“APIs”), dronabinol (THC) and acetazolamide, in comparison to FDA reference listed drugs Marinol
(dronabinol) and acetazolamide oral tablets, respectively, manufactured by Taro Pharmaceutical Industries. The study will also investigate
the effect of food on IHL-42X tolerability and PK. The BA/BE study was designed to evaluate the concentrations of APIs and metabolites
in blood samples over 48 hours. This study was designed to adhere to FDA recommendations for bioequivalence studies. We expect the outcomes
of the BA/BE trial twill serve as a bridging mechanism to the reference listed drugs, potentially facilitating regulatory approval via
the FDA 505(b)(2) regulatory pathway.
We have completed dosing of 115 participants in
the BA/BE study, and we expect to release top-line results in 2024.
Phase 2/3 Clinical Trial Investigating IHL-42X in Patients with
OSA (the “RePOSA Study”)
The RePOSA Study is a global, randomized, double-blind
Phase 2/3 clinical trial, investigating the effect of IHL-42X in patients with OSA who are non-compliant, intolerant or naïve to
positive airway pressure devices, such as CPAP, to determine the safety and efficacy of the drug candidate. The RePOSA study is being
conducted in accordance with an IND cleared by the FDA.
The primary endpoint of the RePOSA Study is a change
in AHI as compared to baseline. Key secondary endpoints include a change in patient sleep quality, sleep related impairments and fatigue.
Other secondary endpoints include a change in oxygen saturation index, hypoxic burden and sleepiness. Exploratory endpoints are change
in sleep architecture, cognitive function, blood pressure and other biomarkers identified for those at risk for OSA. The RePOSA Study
consists of two component studies, or phases: a Phase 2, four-week, dose ranging, three-arm (IHL-42X low dose (2.5 mg dronabinol + 125
mg acetazolamide), IHL-42X high dose (5 mg dronabinol + 250 mg acetazolamide) and placebo) trial designed to determine the optimal dose
of IHL-42X based on safety and efficacy in OSA patients; and a Phase 3, 52-week, four-arm (IHL-42X, dronabinol, acetazolamide and placebo),
factorial trial that will compare the optimal dose of IHL-42X to the component APIs, dronabinol and acetazolamide, at equivalent doses,
as well as placebo. The endpoints, inclusion criteria and study procedures are similar across both component studies, which is designed
to streamline the transition process from Phase 2 to Phase 3.
The trial is expected to be conducted in as many
as 55 sites. This is anticipated to include 25 sites in the United States, 16 in Germany, seven in Spain, two in Finland and five in the
United Kingdom. The target patient population is individuals aged 18 years or older with OSA who are intolerant, non-compliant or naïve
to positive airway pressure. We plan to recruit 560 subjects, with a total of 355 subjects receiving IHL-42X (patients in the dronabinol
and acetazolamide arms will receive IHL-42X for part of the study) and 205 subjects receiving placebo over the course of the study. The
first subject in the Phase 2 portion of the Re-POSA Study was dosed in May 2024. We anticipate reporting top-line data from the Phase
2 portion of the RePOSA Study in the first half of 2025. We expect to dose the first subject in the Phase 3 portion of the RePOSA Study
in the first half of 2025 and to announce top-line Phase 3 data in the first half of 2027.
5
General Anxiety Disorder
Generalized Anxiety Disorder or “GAD”
GAD is a chronic, often debilitating mental health
disorder that affects approximately 10% of U.S. adults in their lifetimes. Symptoms of GAD include excessive anxiety and worry that persists
for over six months, which can lead to significant impairments in social, occupational and other functioning, according to the National
Institute of Mental Health (“NIMH”). GAD is the most common anxiety disorder seen in primary care settings. An estimated 6.8
million adults are diagnosed with GAD in a given year in the United States.
Existing Treatments
There is a significant unmet need for new therapies
in GAD. Current recommendations for GAD treatment include selective serotonin reuptake inhibitors (“SSRIs”), serotonin and
noradrenaline reuptake inhibitors (“SNRIs”), and pregabalin as first-line options, with benzodiazepines as second-line options.
GAD is also treated with psychotherapy alone or in combination with pharmacotherapies. However, these treatments have significant limitations,
including a delayed onset of action, poor therapy adherence rates and substantial treatment side effects. In particular, the side effects
associated with long-term use of these pharmacotherapies include emotional numbness, reduced positivity, weight gain, sexual dysfunction,
and suicidal thoughts.
Psychedelic-Assisted Psychotherapy as a Treatment in Mental
Health
Psychedelic-assisted psychotherapy may provide
rapid, significant, and lasting benefits in treating unipolar depression, depression and anxiety symptoms associated with a terminal illness,
and substance misuse. Psilocybin is a psychoactive molecule that occurs naturally in several genera of mushrooms, which primarily acts
on the serotonin receptor system, and can modulate states of consciousness, cognition, perception, and mood.
Over the past decade, there has been an accumulating
body of evidence that psilocybin may have beneficial effects in anxiety, depression, and other mental health conditions. In these studies,
administration of psilocybin with psychological support from trained therapists provided a rapid reduction in anxiety and depression symptoms
on the day of administration with generally maintained treatment effects at follow-up assessments many months later. These studies have
shown psilocybin to be generally well-tolerated. Most studies do not report serious adverse events.
Two psilocybin third-party research programs for
depression have received breakthrough therapy designation from the FDA. A small number of other psilocybin treatment development programs
are underway globally. Should the results from any of these research programs be positive, approval of psilocybin-assisted psychotherapy
as a prescription treatment could occur within the next five years.
PSX-001 for GAD
Our oral psilocybin lead candidate, PSX-001 is designed to be used
in combination with psychological therapy from trained therapists that has been specifically designed for patients diagnosed with generalized
anxiety disorder. The therapy is designed to optimize patient safety and therapeutic outcomes in GAD with specific support before, during
and after PSX-001 dosing sessions.
Our psilocybin treatment includes administration
of two therapeutic doses of our drug candidate, PSX-001, with psychological support from trained therapists before, during and after each
dose session. The psychotherapy comprises three distinct phases:
6
Phase 2 Exploratory Proof-of-Concept Clinical Trial
We conducted a Australian Phase 2 exploratory,
proof-of-concept clinical trial, known as PsiGAD1, pursuant to an authorization from the Human Research Ethics Committee (“HREC”).
The trial was a Phase 2 randomized triple-blind
active-placebo-controlled trial to assess the safety and efficacy of psilocybin-assisted psychotherapy for GAD. Participants experienced
two psilocybin or active-placebo dosing sessions and up to 11 non-drug, specialist psychotherapy sessions over a period of ten weeks.
Primary outcomes were safety, efficacy and tolerability,
and secondary outcomes included quality of life, functional impairment, and comorbidities. Safety was assessed by monitoring adverse events
including but not limited to liver function tests and scores on the Ultra Brief Checklist of Suicidality. Efficacy was assessed by comparing
the change in Hamilton Anxiety Ratings Scale (“HAM-A”) from baseline between the placebo and treatment group. Tolerability
was assessed by comparing the proportion of participants who complete both dosing sessions in the placebo and treatment groups. Secondary
endpoints were assessed by monitoring disability, comorbidity, productivity and quality of life using patient reported outcome measures.
Based on topline results from this trial, the trial
met its primary endpoint, supporting a large clinical effect in the psilocybin treatment group compared to the placebo group.
The reduction in HAM-A score from baseline in the
psilocybin group was 12.8 points, from 29.5 at baseline to 16.8 at week 11 (6 weeks following the final dosing session). This reduction
in HAM-A score observed in the psilocybin group was 9.2 points greater than the reduction observed in the placebo group (-12.8 psilocybin
vs. -3.6 placebo; p<0.0001). In the trial, 44% of subjects in the psilocybin group were observed to show a clinically meaningful improvement
of at least 50% subjects in anxiety score from baseline; a ‘response rate’ more than four times higher than that of the placebo
group.
Psilocybin within the context of psychotherapy
was observed to be well-tolerated, with only mild and moderate TEAEs reported. No serious or severe adverse events were observed. Only
one of the 73 participants withdrew from the trial during the 7-week treatment program.
We anticipate announcing final results from this
trial in the first half of 2025.
Next Steps in PSX-001 Clinical Development
The FDA has completed its review of our IND and
gave its authorization for us to proceed with a Phase 2b clinical trial in the United States. This trial is expected to include approximately
94 subjects (including those currently treated with SSRIs who meet the study inclusion and exclusion criteria), evaluate change in the
HAM-A anxiety score and other measures of efficacy and be conducted at multiple sites in the United States and the United Kingdom. The
required review of the trial dossier by the UK’s Medicines and Healthcare products Regulatory Agency (“MHRA”) is underway.
We have designed the follow-up Phase 2b clinical trial with the assistance of Clerkenwell Health, a UK-based contract research organization
(“CRO”) specializing in psychiatry and central nervous system treatments.
Development and Manufacture of cGMP Psilocybin Drug Product
We have engaged Catalent for the development and cGMP manufacture of
Incannex’s oral psilocybin drug candidate, PSX-001. Final preparations for the manufacture of the cGMP clinical trial supply of
PSX-001 are currently ongoing. This drug candidate will be used in our planned clinical trials.
Model Mental Health Clinic for Psychedelic-Assisted Psychotherapy
We have opened one of the first psychedelic-assisted
psychotherapy clinics in Australia, which will serve as a model for potential future sites. We believe this first clinic will provide
real-world experience in treating mental health patients utilizing psychedelic-assisted psychotherapy. Assuming regulatory approval, this
experience will provide insight on the potential commercialization of PSX-001.
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IHL-675A
We are developing IHL-675A, an oral fixed dose combination drug candidate
that contains synthetic cannabidiol (“CBD”) and hydroxychloroquine sulphate (“HCQ”) for the treatment of inflammatory
conditions, with an initial focus on rheumatoid arthritis. Inflammatory conditions occur when the body’s immune system attacks its
own tissues and organs causing inflammation, pain, discomfort, and damage to the affected tissues.
IHL-675A comprises a combination of hydroxychloroquine
sulphate, an approved anti-rheumatic drug, and synthetic CBD. HCQ is a disease modifying antirheumatic drug that regulates the activity
of the immune system, which may be overactive in some conditions. HCQ can modify the underlying disease process, rather than simply treating
the symptoms. In our in vitro studies and experiments, we demonstrated that IHL-675A components, CBD and HCQ, act synergistically to inhibit
production of key inflammatory cytokines. Based on the results of these experiments and in vitro studies, we believe IHL-675A also has
the potential for use in rheumatoid arthritis and other inflammatory conditions, such as acute respiratory distress syndrome, COPD, asthma,
bronchitis and inflammatory bowel diseases, e.g. colitis and Crohn’s disease. The rheumatoid arthritis market in the United States
is growing rapidly with sales for rheumatoid arthritis treatments reaching US$25.37 billion in 2023. This market is expected to exceed
US$31.58 billion by 2033.
Manufacturing Arrangements
We engaged Procaps for the manufacture of a specific
oral, fixed dose formulation of IHL-675A that is now being tested in our clinical trials.
Rheumatoid Arthritis
Rheumatoid arthritis is a chronic inflammatory
disorder that can affect joints, skin, eyes, lungs, heart and blood vessels. As an autoimmune disorder, rheumatoid arthritis is caused
by attacks to body tissues by one’s immune system. Unlike the wear-and-tear damage caused by osteoarthritis, rheumatoid arthritis
causes a painful swelling that can eventually result in bone erosion and joint deformity. HCQ is approved for treatment of rheumatoid
arthritis in the form of hydroxychloroquine sulphate and marketed as Plaquenil and generic equivalents.
Phase 1 Clinical Trial for IHL-675A
A Phase 1 clinical trial to assess the safety and
PK of IHL-675A in healthy volunteers, the results of which will form part of our planned FDA IND for rheumatoid arthritis, and potentially
lung inflammation and inflammatory bowel disease. The key endpoints of the trial were the adverse events reported and the plasma levels
of the APIs, CBD and HCQ, and their major metabolites over a 28-day period. Three cohorts of 12 participants (n = 36) received either
IHL-675A, Epidiolex (CBD) or Plaquenil (HCQ) and the assessments were identical across the three arms of the trial. The trial measured
the safety, tolerability, and PK profiles of IHL-675A compared to the reference listed drugs, Epidiolex (CBD) and Plaquenil (HCQ).
CBD and HCQ have historically been used independently
in treating rheumatoid arthritis and other inflammatory disorders. However, as with any pharmaceuticals, there were risks involved when
evaluating as a combination. Part of the strategy in the design of IHL-675A was that the combination of CBD with HCQ permitted a reduction
in HCQ, which reduced the known risks associated with cumulative HCQ dose, without sacrificing efficacy. Results from the in vitro preclinical
studies we conducted prior to the trial led to the hypothesis that a lower cumulative dose of HCQ, when combined with CBD, would also
reduce disease severity scores in IHL-675A’s target indications in humans. Nonetheless, there was always the potential for the two
drugs to interact and exacerbate minor concerns that exist when used alone or lead to new safety concerns. Demonstrating that a combination
drug containing CBD and HCQ had a similar safety profile to the component drugs was an important step in the development program and was
a requirement set out by regulatory agencies. Safety assessments in this trial included cardiac monitoring via 24-hour Holter monitor
and electrocardiogram (“ECG”), and blood biomarkers, serum liver enzyme levels, blood cell counts and biochemistry, monitoring
of vital signs and mental health questionnaires.
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The other component of this study was monitoring
the PK of the API of IHL-675A, CBD and HCQ, and comparing them to their respective reference listed drugs Epidiolex and Plaquenil. Study
participants were dosed with either IHL-675A, Epidiolex or Plaquenil with equivalent amounts of the respective API. Blood samples were
drawn at predetermined intervals over a 48-hour period, as well as seven, 14, 21 and 28 days post dosing, and analyzed for levels of CBD
and HCQ as well as their major metabolites. For each molecule the maximum concentration (“Cmax”), time to maximum concentration
(“Tmax”) and total exposure (“AUCinf”) were determined. The PK parameters for IHL-675A, Epidiolex and Plaquenil
were compared to determine whether the APIs in IHL-675A were bioequivalent to the reference listed drugs. Bioequivalence is an important
component of the FDA 505(b)2 approval pathway that Incannex is targeting with IHL-675A.
Based on final available study results, IHL-675A
was observed to be well-tolerated and both the active pharmaceutical ingredients were bioavailable.
CBD PK Results
Comparison of the average PK of CBD in participants
administered IHL-675A compared to those administered Epidiolex revealed that the CBD was taken up from IHL-675A more quickly and reached
a higher maximum concentration than from Epidiolex. The average Cmax of CBD from IHL-675A was 1.57 times higher than for Epidiolex. The
Tmax was 26% faster for IHL-675A than Epidiolex. CBD administered in IHL-675A was also cleared more quickly than Epidiolex. The half-life
(t1/2) of CBD from IHL-675A was 13% faster than Epidiolex. The AUCinf was similar for CBD administered as IHL-675A and Epidiolex. These
patterns are trends at this point (p >0.05). Similar results were observed for CBD metabolites 7-COOH-CBD and 7-OH-CBD.
Hydroxychloroquine PK Results
A comparison of the average PK of HCQ in participants
administered IHL-675A compared to those administered Plaquenil revealed that HCQ was taken up more slowly from IHL-675A than from Plaquenil.
However, the two drugs had a similar maximum plasma concentration. The Tmax for HCQ administered as IHL-675A was 46% slower than for Plaquenil.
The hydroxychloroquine clearance and total exposure were similar for the two drugs. These patterns are trends at this point (p >0.05).
Plasma concentrations of hydroxychloroquine of HCQ metabolites desethylhydroxychloroquine, bisdesethylhydroxychloroquine and desethylchloroquine
were detected only at low levels (<2 ng/mL) at all points in the study.
Tolerance
IHL-675A was observed to be well-tolerated, with
no serious adverse events reported. The same number of treatment related TEAEs were reported for IHL-675A as for Epidiolex. Fewer treatment
related TEAEs were reported for Plaquenil. All treatment related TEAEs were minor, with the exception of one incidence of moderate severity
abdominal cramps, which was resolved soon after onset.
Interpretation of the Results from the Phase 1 Clinical Trial
Both APIs, CBD and HCQ, were absorbed from IHL-675A.
Trends in PK profiles indicated that the uptake of CBD may be more rapid for IHL-675A than Epidiolex and uptake of HCQ may be slower for
IHL-675A than Plaquenil. This could be advantageous for IHL-675A. Clinical evidence suggests that CBD provides immediate relief for inflammation
and pain, whereas HCQ is a slower acting molecule and provides extended relief.
Phase 2 Clinical Trial Assessing the Effects of IHL-675A on
Pain and Function in Patients with Rheumatoid Arthritis
We are conducting a Phase 2 clinical trial in Australia
to assess the safety and efficacy of IHL-675A on pain and function in patients with rheumatoid arthritis. The trial is planned to include
approximately 128 subjects who meet the eligibility criteria and who upon enrollment will be randomized according to one of four arms:
either IHL-675A, CBD alone, HCQ alone or placebo. The treatments will be double blinded, meaning neither the investigators nor patients
will know which treatment an individual is receiving.
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The primary endpoint for the Phase 2 trial is pain
and function relative to baseline determined via the score on the RAPID3 assessment at 24 weeks. Per the protocol, participants will record
their pain and function outcomes daily, by completing questionnaires on pain, fatigue, joint stiffness and quality of life, using an electronic
patient reported outcomes device (similar to completing a questionnaire on an electronic tablet). The participants will also attend monthly
visits at the clinical trial site, where blood tests, and physical examinations will monitor additional safety and efficacy outcomes,
including inflammatory biomarkers. We anticipate reporting top-line data in the second half of 2025.
FDA Development
We
have completed pre-IND meetings with the FDA to discuss the regulatory pathway for the development of IHL-675A for rheumatoid arthritis
and inflammatory lung conditions in the United States and plan to initially open an IND for a Phase 2 trial forrheumatoid arthritis. The
FDA provided guidance on the requirements for 505(b)(2) NDA submissions, as was proposed for IHL-675A, that rely on the FDA’s finding
of safety and/or effectiveness for listed drugs. In the pre-IND meeting for use of IHL-675A for treatment of rheumatoid arthritis, the
FDA confirmed that no further non-clinical studies are needed to open an IND and provided guidance on the proposed clinical development
plan for IHL-675A in rheumatoid arthritis.
Secondary Assets and Additional Opportunities
While we are focusing our available resources on
the continued development of our three lead drug candidates in the above indications, we are also exploring the development of 25 other
secondary assets where we believe proof-of-concept has been established in either preclinical studies, Phase 1 clinical trials or Phase
2 clinical trials.
These secondary drug candidates target a variety
of potentially high-value indications, including topical cannabinoid candidates for various skin conditions (estimated global market size
US$1.8 billion in 2021), a chewable candidate for smoking cessation (estimated global market size US$28.9 billion in 2024 with estimated
9.2% CAGR) and a candidate for the treatment of opioid addiction (estimated global market size of $4.59 billion in 2021). We also believe
our lead drug candidate, IHL-675A, may be able to treat inflammatory bowel disease (estimated U.S. market size US$21 billion in 2021)
and pulmonary inflammatory diseases such as COPD and asthma (estimated combined U.S. market size US$36.7 billion in 2022).
Intellectual Property
We strive
to protect the proprietary know-how and technology that we believe is important to our business, including seeking and maintaining patents
intended to cover our drug candidates and compositions, their methods of use and processes for their manufacture, and any other aspects
of inventions that are commercially important to the development of our business. In addition to pursuing patent protection for
all our assets, we rely on unpatented trade secrets, know-how and other confidential information as well as proprietary technological
innovation and expertise that are protected in part by confidentiality and invention assignment agreements with our employees, advisors
and consultants.
We plan to
continue to expand our intellectual property estate by filing patent applications directed to compositions, methods of use, treatment
and patient selection, formulations and manufacturing processes created or identified from our ongoing development of our drug candidates.
We have three primary patent families in our lead drug candidates, including IHL-42X, IHL-675A, and PSX-001. Our IHL-42X patent
portfolio consists of ten pending applications, and our IHL-675A patent portfolio consists
of 16 pending applications. If granted, the patent applications in the IHL-42X patent portfolio
are expected to expire as far out as 2041 to 2043, and the patent applications in the IHL-675A patent
portfolio are expected to expire as far out as 2041 to 2042 (in each case, subject to any patent
term disclaimers, adjustments, or extensions). Patent applications in each of these families are active in multiple jurisdictions, including,
the United States, Australia, Canada, Colombia, European Patent Organization, Israel, New Zealand, and Japan. Our. Our
PSX-001 patent portfolio consists of one pending application. If granted, the patent application is expected to expire in 2045.
PSX-001 1 Standard/utility Provisional
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We
plan to continue to expand our intellectual property estate by filing patent applications directed to compositions, methods of use, treatment
and patient selection, formulations and manufacturing processes created or identified from our ongoing development of our drug candidates.
Our success will depend on our ability to obtain and maintain patent and other proprietary protection for commercially important technology,
inventions and know-how related to our business; defend and enforce our patents; preserve the confidentiality of our trade secrets; and
operate without infringing the valid and enforceable patents and proprietary rights of third parties. We seek to obtain domestic and international
patent protection, and endeavor to promptly file patent applications for new commercially valuable inventions.
The
patent positions of biopharmaceutical companies like us are generally uncertain and involve complex legal, scientific and factual questions.
In addition, the coverage claimed in a patent application can be significantly reduced before the patent is issued, and patent scope can
be reinterpreted by the courts after issuance. Moreover, many jurisdictions, including the United States, permit third parties to challenge
issued patents in administrative proceedings, which may result in further narrowing or even cancellation of patent claims. We cannot predict
whether the patent applications we are currently pursuing, or may in the future pursue, will issue as patents in any particular jurisdiction
or whether the claims of any issued patents will be enforceable or provide sufficient protection from competitors.
Because
patent applications in the United States and certain other jurisdictions are maintained in secrecy for 18 months or potentially even longer,
and since publication of discoveries in the scientific or patent literature often lags behind actual discoveries, we cannot be certain
of the priority of inventions covered by our issued patents, our pending patent applications or of patent applications we may file in
the future. Moreover, we may have to participate in interference proceedings or derivation proceedings declared by the U.S. Patent and
Trademark Office (“USPTO”), or similar proceedings outside the United States, to determine priority of invention.
As of June 30, 2024, we also own trademark registrations
in Australia and the United States to distinguish and/or protect our brand, including our company name and logo.
Competition
We are targeting indications that have limited,
inadequate, or no approved pharmaceutical treatment options. The table below outlines existing drugs and therapies used to treat the illnesses
we aim to treat with our drug candidates and what believe are some of the associated pitfalls for patients with these existing drugs and
therapies.
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However, the biopharmaceuticals
industry is highly competitive. While we believe that our investigational synthetic cannabinoid-combination and psychedelic-assisted treatments
represent a fundamental shift in the treatment paradigm relative to other treatments for these serious, chronic diseases, we face or may
face potential competition from many different sources, including major pharmaceutical, biopharmaceutical, specialty pharmaceutical and
biotechnology companies, academic institutions, governmental agencies and medical research organizations. Many
of our competitors may have significantly greater financial, manufacturing, marketing, drug development, technical and human resources
than we do. Accordingly, our potential competitors may succeed in obtaining FDA or other regulatory approval for alternative or
superior products. Any drug candidates, that we successfully develop, will compete with the standard of care and new therapies that may
become available in the future.
Our competitors also may compete with us in recruiting and retaining
qualified scientific and management personnel, in establishing clinical trial sites and enrolling subjects for our clinical trials and
in acquiring technologies complementary to, or necessary for, our programs. In addition, competitors may have higher name recognition
and more extensive collaborative relationships. Mergers and acquisitions in the pharmaceutical, biotechnology and diagnostic industries
may result in even more resources being concentrated among a smaller number of competitors. Smaller or emerging earlier stage companies
may also prove to be significant competitors, particularly if they have collaborations with larger, established companies. Competitors
in the OSA drug development space include Apnimed, Inc. and Desitin Arzneimittel GmbH. A number of companies are developing drug candidates
intended for the treatment of GAD, including Cybin Inc., Otsuka Pharmaceutical Development & Commercialization, Inc., Sunovion Pharmaceuticals
Inc., Mind Medicine Inc., and others. Competitors working on novel biopharmaceuticals focused on modulation of the serotonin and dopamine
systems include atai Life Sciences N.V., Compass Pathways plc, GH Research plc and others. There are a large number of existing pharmaceutical
companies marketing drugs for the treatment of rheumatoid arthritis, including Pfizer Inc., Abbvie Inc., Amgen Inc., Novartis AG, Boehringer
Ingelheim International GmbH, Eli Lilly and Company, F. Hoffmann-La Roche AG, Bristol Myers Squibb, AstraZeneca PLC, Merck & Co.,
Inc. While we believe we have identified the potential for IHL-675A to more effectively reduce pain and increase quality of life over
these existing therapies and standard of care, IHL-675A will compete with these other therapeutic options.
We are further aware
that there are non-FDA approved CBD preparations being made available from companies in the medical marijuana industry, which might compete
with our drug candidates. While federal law prohibits the sale and distribution of most marijuana products not approved or authorized
by FDA, the vast majority of states and the District of Columbia have legalized either CBD or marijuana for either recreational or medical
use, or both, and congressional efforts related to legalization of marijuana continue. Further, under the U.S. Farm Bill, enacted in late
2018, certain extracts and other material derived from cannabis are no longer controlled under the federal Controlled Substances Act of
1970 (“CSA”). However, the marketing of such products as a food, dietary supplement, or for medical purposes remains subject