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, 2025
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 Not applicable
(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 Capital 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 common stock held
by non-affiliates of the registrant computed by reference to the closing price of $2.12 of the common stock on the Nasdaq Global Market
as of December 31, 2024, was approximately $29.1 million. The calculation of the aggregate market value of the common stock 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 September 28, 2025, there were 347,705,507 shares of the registrant’s
common stock issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Certain information required to be disclosed in Part III of this report
is incorporated by reference from certain filed portions of the registrant’s definitive Proxy Statement for the 2025 Annual Meeting of
Stockholders, which proxy statement will be filed not later than 120 days after the end of the fiscal year covered by this Form 10-K.
TABLE OF CONTENTS
PART I 1
Item 1. Business 1
Item 1A. Risk Factors 40
Item 1B. Unresolved Staff Comments 81
Item 1C. Cybersecurity 81
Item 2. Properties 83
Item 3. Legal Proceedings 83
Item 4. Mine Safety Disclosures 83
Item 6. [Reserved] 84
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 91
Item 8. Financial Statements and Supplementary Data F-1
Item 9A. Controls and Procedures 92
Item 9B. Other Information 93
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 93
PART III 94
Item 10. Directors, Executive Officers and Corporate Governance 94
Item 11. Executive and Director Compensation 94
Item 14. Principal Accountant Fees and Services 94
Item 15. Exhibits and Financial Statement Schedules 95
SIGNATURES 98
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, 2025 (“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 disclosures 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 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.
IHL-42X, our drug candidate in a pivotal Phase
2/3 clinical trial for the treatment of obstructive sleep apnea (“OSA”) is an oral fixed-dose combination of dronabinol and
acetazolamide designed to act synergistically by targeting two different physiological pathways associated with the intermittent hypoxia
and hypercapnia that characterize OSA. In a proof-of-concept study conducted in Australia, as well as in the Phase 2 portion of our RePOSA
clinical trial, we observed that IHL-42X reduced apnea hypopnea index (“AHI”) and was well-tolerated in OSA patients.
In the Phase 2 portion of the RePOSA clinical trial
investigating, IHL-42X maximum reductions in AHI were observed at up to 83% for the high-dose group and up to 79% for the low-dose group.
Notably, 33.3% of patients in the low-dose group and 41.2% of patients in the high-dose group achieved a greater than 30% reduction in
AHI, while 13.9% (low-dose) and 14.7% (high-dose) experienced reductions exceeding 50%. Significant clinical improvement was observed
across multiple secondary endpoints. Observed treatment-emergent adverse effects (“TEAEs”) were infrequent, with the majority
being mild or moderate in severity. The low-dose and high-dose IHL-42X groups achieved a statistically significant reduction in percent
change in AHI from baseline compared to placebo (p<0.05), the primary measure of OSA severity. Based on these results, we are finalizing
arrangements for our End of Phase meeting with the U.S. Food and Drug Administration (the “FDA”) to obtain guidance on
planned next steps, including a pivotal Phase 3 trial design.
PSX-001, our drug candidate in Phase 2 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 Phase 2 clinical trial, known as PsiGAD1, in the results of which we
observed that the combination of synthetic psilocybin with psychotherapy significantly reduced anxiety scores and was well-tolerated in
GAD patients. In this trial, statistically meaningful reductions in Hamilton Anxiety Rating Scores (“HAM-A scores”) were observed,
with subjects in the investigational arm achieving an average 12.8-point reduction from baseline that was sustained for an 11-week follow
up period. A greater than 50% reduction in HAM-A scores was observed in 44.1% of subjects receiving the experimental treatment and 24%
of subjects in the treatment arm achieved full disease remission, a number five times higher than placebo. Improvements were also observed
in secondary endpoint measures. PSX-001 was observed to be well-tolerated with no serious adverse events reported. The majority of TEAEs
were transient, mild to moderate in nature and consistent with the expected pharmacological effects of psilocybin. No signs of increased
suicidality, psychosis, or prolonged psychological distress, concerns often cited with psychedelic treatments, were observed. We have
a cleared Investigational New Drug (“IND”) application with the FDA and are preparing to initiate a multi-jurisdiction Phase
2 clinical trial in 2026.
IHL-675A is our drug candidate for the treatment
of inflammatory conditions, with an initial focus on rheumatoid arthritis. IHL-675A is an oral fixed-dose combination of cannabidiol (“CBD”)
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. This candidate was being
developed in an Australian Phase 2 trial investigating the safety and efficacy of IHL-675A in rheumatoid arthritis patients, but we encountered
patient recruitment challenges and this Phase 2 clinical trial was terminated. Insufficient data was collected to make any conclusions
on safety or efficacy of IHL-675A. We now are developing a strategy for an IND opening study investigating the safety and efficacy of
IHL-675A in patients diagnosed with rheumatoid arthritis to be conducted in the United States.
Each of these programs represents a potential new
approach to treating serious conditions that currently have limited, inadequate, or no approved pharmaceutical options.
1
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 stockholders and
to provide important new treatment options to patients in need of new therapeutic options. Key elements of our strategy include:
2
Lead Drug Candidates
The estimated addressable global market opportunity
for OSA medical devices is approximately US$8.2 billion, with an estimated compound annual growth rate (“CAGR”) of 7.33% from
2024 to 2029. Sales for GAD treatments in the United States reached approximately US$21 billion in 2023. The rheumatoid arthritis market
in the United States reached US$25.37 billion in 2023 and is expected to exceed US$31.58 billion by 2033. We believe our drug candidate,
IHL-675A, also has potential applications in other inflammatory conditions, such as inflammatory bowel disease, 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
Through our internal research and collaborations with leading medical
institutions in Australia, we identified significant opportunities to pursue combination drug strategies targeting synthetic cannabinoids
and psychedelic agents to address unmet medical needs. Combination therapy allows for lower doses than monotherapy, which may reduce the
likelihood of unwanted side effects while enhancing efficacy.
3
IHL-42X
Obstructive Sleep Apnea or “OSA”
OSA is a disease of sleep disordered breathing
characterized by a narrowing 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.
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. OSA 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 limited drug treatment options for OSA.
Certain drug products containing tirzepatide, a GLP-1 agonist, are approved for treatment of OSA in obese patients. Tirzepatide is also
approved to treat obesity, reducing body mass index. There is a well-established link between obesity and OSA risk, and one of the consequences
of reducing body mass index in obese patients with OSA is improvement of OSA severity. However, tirzepatide does not treat the pathophysiological
mechanisms of OSA outside of obesity and is not an available option for non-obese OSA patients, which is estimated to be greater than
67% of the OSA patient population.
Available non-pharmacological treatment options
for OSA 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 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.
4
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 (“ESS”), 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 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). The lowest dose (2.5 mg dronabinol + 125 mg acetazolamide ) was
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 were recorded from the time the subjects enrolled in the trial
until their end-of-study visit. After recording TEAEs, 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.
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 Phase 2/3 clinical trial (or the RePOSA 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 for our clinical trials.
Bioavailability/Bioequivalence Clinical Trial
We conducted a bioequivalence/bioavailability (“BA/BE”)
clinical trial for IHL-42X. The BA/BE study focused on assessing the pharmacokinetics (“PK”) and tolerability of IHL-42X’s
active pharmaceutical ingredients (“APIs”), dronabinol (a synthetic form of THC) and acetazolamide, in comparison to FDA reference
listed drugs Marinol (dronabinol) and acetazolamide oral tablets manufactured by Taro Pharmaceutical Industries. The trial also investigated
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, and to adhere to FDA recommendations for bioequivalence studies. In January 2025, we announced positive
topline results from this trial. These topline results confirmed bioavailability of IHL-42X, demonstrating delivery of both dronabinol
and acetazolamide. The PK profile of IHL-42X was similar to those observed for the respective reference listed drugs, including equivalent
total exposure levels (“AUCinf”) observed for the drug molecules. Furthermore, administration of IHL-42X with food, in contrast
to fasted conditions, indicated no substantial food effect on overall exposure to acetazolamide. Consistent with what is known for the
reference listed drugs, an increase in overall exposure to THC was observed when IHL-42X was administered with food compared to fasted
state. No serious adverse events were reported during the trial. TEAEs were generally observed to be mild to moderate. The proportion
of subjects reporting at least one TEAE on the IHL-42X fasted period (57.4%) was similar to the dronabinol fasted period (52.1%). Fewer
subjects reported TEAEs during the acetazolamide fasted treatment period (37.8%). Food did not have a substantial effect on the number
of subjects reporting TEAEs for IHL-42X, with 57.4% fasted vs 58.8% fed.
5
We expect the outcomes of the BA/BE trial will
serve as a bridging mechanism to the reference listed drugs, potentially facilitating regulatory approval via the FDA 505(b)(2) regulatory
pathway.
Phase 2/3 Clinical Trial Investigating IHL-42X in Patients with
OSA (the “RePOSA Study”)
The RePOSA Study is a 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
PAP 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 Phase 2 portion
of the RePOSA Study was a 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. The Phase 3 portion of the trial is a 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 Phase 2 portion of the RePOSA Study was completed
in July 2025 and demonstrated statistically and clinically significant improvements across multiple key endpoints for patients receiving
IHL-42X compared to placebo, highlighting its potential to reduce OSA severity and enhance patient quality of life:
6
IHL-42X was also observed to be well-tolerated
across both low- and high-dose cohorts. No serious adverse events were reported during the treatment period, and TEAEs were infrequent,
with the majority being mild or moderate in severity.
We are finalizing arrangements for our End of Phase
2 meeting with the FDA to get feedback on planned next steps, including a pivotal Phase 3 trial design.
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 persist
for over six months, which can lead to significant impairments in social, occupational and other functioning, according to the National
Institute of Mental Health. 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.
7
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 GAD. 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:
Phase 2 Exploratory Proof-of-Concept Clinical Trial
We conducted an Australian Phase 2 exploratory,
proof-of-concept clinical trial, known as PsiGAD1, pursuant to an approval from the Human Research Ethics Committee.
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 HAM-A scores 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.
In August 2025, we reported full results which
demonstrated that the trial met its primary endpoint, supporting a clinical effect in the psilocybin treatment group compared to the placebo
group. Statistically meaningful reductions in HAM-A scores were observed, with patients being treated with PSX-001 achieving an average
12.8-point reduction from baseline that was sustained for an 11-week follow-up period. A greater than 50% reduction in HAM-A scores was
observed in 44.1% of patients receiving treatment, and 24% of patients receiving treatment achieved full disease remission, a number five
times higher than placebo. Improvements were also observed in secondary endpoint measures including, (i) an average 7.4-point reduction
in Generalized Anxiety Disorder 7-item scale scores, compared to a 3.5-point reduction for placebo (p<0.0004), (ii) a 6.0-point reduction
in Sheehan Disability Scale scores, versus 1.3 points in the placebo group (p<0.007), (iii) a 3.9-point reduction in Patient Health
Questionnaire-9 scores compared to just 0.3 points in the placebo group (p<0.005), and (iv) an improvement in Personal Wellbeing Index,
also known as “quality of life,” by an average of 10.6 points in the Psi-GAD group versus 2.7 points for placebo—a statistically
significant difference (p<0.002). PSX-001, within the context of psychotherapy, was observed to be well-tolerated with no serious adverse
events reported. The majority of TEAEs were transient, mild to moderate in nature and consistent with the expected pharmacological effects
of psilocybin. Only one of the 73 participants withdrew from the trial during the 7-week treatment program. No signs of increased suicidality,
psychosis, or prolonged psychological distress, concerns often cited with psychedelic treatments, were observed.
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Next Steps in PSX-001 Clinical Development
The FDA has completed its review of and cleared
our IND and gave its authorization for us to proceed with a Phase 2b clinical trial investigating PSX-001 in patients diagnosed with GAD.
We are preparing to initiate this trial in 2026. This Phase 2b 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”) has also been completed. 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 Current Good Manufacturing Practices
(“cGMP”) Psilocybin Drug Product
We have engaged Ardena US LLC (formerly
Catalent Pharma Solutions LLC) for the development and cGMP manufacture of Incannex’s oral psilocybin drug candidate, PSX-001.
This drug candidate will be used in our planned clinical trials.
Model Mental Health Clinic for Psychedelic-Assisted Psychotherapy
On June 17, 2025, we announced our 50:50 joint
venture with Mind Medicine Australia (“MMA”) to operate a psychedelic-assisted therapies services clinic in Melbourne, Australia.
The new entity, MMA Clinics, represents a strategic advancement in our commercialization model. The joint venture will deliver a fully
integrated suite of services including clinical operations, governance, medicine supply, medical oversight, and marketing support to a
growing network of aligned authorized prescribers across Australia.
IHL-675A
We are developing IHL-675A, an oral fixed-dose
combination drug candidate that contains synthetic 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 disease model experiments, we demonstrated that IHL-675A components, CBD and HCQ, act synergistically
to inhibit production of key inflammatory cytokines as well as other key measures of disease severity. Based on the results of these experiments,
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 for 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.
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Phase 1 Clinical Trial for IHL-675A
We have completed 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, and blood biomarkers, serum liver enzyme levels, blood cell counts and biochemistry, monitoring of vital signs
and mental health questionnaires.
The other component of this trial 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 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 APIs were bioavailable. The results of this study were published in a peer reviewed journal
in 2025 (Mbogo, George Williams, et al. “An open-label phase I comparator-controlled clinical trial to assess tolerability and PKs
of IHL-675A a fixed-dose combination of CBD plus hydroxychloroquine in healthy volunteers.” Scientific Reports 15.1 (2025): 19357.).
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 Cmax 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.
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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 planned to conduct 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 was planned
to include approximately 128 subjects who met the eligibility criteria and who upon enrollment would have been be randomized according
to one of four arms: either IHL-675A, CBD alone, HCQ alone or placebo. The treatments were to be double blinded, meaning neither the investigators
nor patients would have known which treatment an individual was receiving.
The primary endpoint for the Phase 2 trial was
pain and function relative to baseline determined via the score on the RAPID3 assessment at 24 weeks. Per the protocol, participants were
to 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
also attended monthly visits at the clinical trial site, where blood tests, and physical examinations were to monitor additional safety
and efficacy outcomes, including inflammatory biomarkers. This study was terminated prior to completion due to challenges with patient
recruitment. Insufficient data was collected to make any conclusions on safety or efficacy of IHL-675A.
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 for rheumatoid 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.
We are currently building on the feedback from FDA to design an IND opening study to investigate the safety and efficacy of IHL-675A
in patients diagnosed with 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.
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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. We have two primary patent families
in our lead drug candidates, including IHL-42X and IHL-675A. Our IHL-42X patent portfolio consists of 12 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. We are currently exploring potential patent protection strategies for our lead drug candidate, PSX-001.
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.
We also own trademark registrations in Australia
and the United States to distinguish and/or protect our brand, including our company name and logo.
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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.
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