Incannex Healthcare, the Melbourne-based clinical-stage biopharmaceutical company developing therapies for the treatment of obstructive sleep apnea, rheumatoid arthritis and generalized anxiety disorder, has been in the spotlight lately for many positive developments.
The company, listed on Nasdaq, that uses cannabinoids and psychedelic-assisted medicines to develop combination therapies for the conditions, announced a $20 million share buyback last month, which was followed by positive data from its Phase 2 clinical trial of PSX-001 (formerly Psi-GAD), a psilocybin-assisted psychotherapy treatment for Generalised Anxiety Disorder (GAD).
In July, the company shared positive topline results from its RePOSA Phase 2 clinical trial evaluating IHL-42X- its lead drug candidate for obstructive sleep apnea (OSA).
“Our recent Phase 2 results for IHL-42X, an oral drug for obstructive sleep apnea (OSA) exceeded expectations, not only in clinical endpoints but also in patient-reported outcomes…the findings reinforce that IHL-42X is having a tangible impact on patients’ daily lives,” CEO of Incannex Healthcare, Joel Latham, told Invezz in an interview.
Even though the stock (NASDAQ: IXHL) is down by about 70% YTD, it has gained more than 40% in the last one month itself, on the back of the positive announcements.
“Emerging therapeutic areas can face a lag between scientific progress and market perception. Metrics that truly reflect value include clinical efficacy, safety, trial execution, regulatory alignment, IP protection, and commercial potential,” Latham said.
Latham also laid out the milestones for investors to watch for in the coming quarters, how US president Donald Trump’s plan to reschedule cannabis could impact the pharma industry involved in developing cannabis-based medicines and more.
Excerpts:
Joel Latham, CEO, Incannex Healthcare
Reason behind recent share buyback
Invezz: Your board just authorised a $20 million share buyback program. Could you outline the primary motivations behind this move—was it primarily about undervaluation, managing dilution, or signalling confidence in your clinical pipeline?
The share buyback reflects our confidence in both the strength of our clinical programs and the long-term value we are creating for shareholders.
We believe our current market valuation doesn’t fully capture the progress we’ve made across our pipeline, including the encouraging Phase 2 results for IHL-42X and the advancement of other programs like IHL-675A and PSX-001.
The buyback is a way to return capital to shareholders, optimize our capital structure, and signal the conviction we have in the transformative potential of our therapies.
On lag between progress in therapeutic areas and market perception
Invezz: You said your market valuation does not fully reflect progress across clinical programs. Why is that so, and what metrics do you believe should guide valuation in emerging therapeutic areas like yours?
Emerging therapeutic areas can face a lag between scientific progress and market perception.
Metrics that truly reflect value include clinical efficacy, safety, trial execution, regulatory alignment, IP protection, and commercial potential.
For example, IHL-42X’s Phase 2 results showed significant reductions in apnea events for obstructive sleep apnea, a condition with no FDA-approved pharmacological treatments.
We believe that demonstrating consistent clinical validation, achieving regulatory milestones, and delivering high-quality data are the indicators that best guide valuation in this space.
Milestones for investors to watch for in the coming quarters
Invezz: Incannex released encouraging Phase 2 efficacy results for IHL-42X. What are the defining next steps you’re prioritizing to transition this program toward Phase 3, and what milestones should investors expect in the coming quarters?
Our recent Phase 2 results for IHL-42X, an oral drug for obstructive sleep apnea (OSA) exceeded expectations, not only in clinical endpoints but also in patient-reported outcomes.
We observed reductions in Apnea-Hypopnoea Index (AHI) of up to 83% in some patients, and structured exit interviews revealed that nearly 58% of participants felt meaningful improvements in their OSA, including better sleep quality, reduced daytime fatigue, and enhanced cognitive function.
These findings reinforce that IHL-42X is having a tangible impact on patients’ daily lives.
The next steps focus on the global Phase 2/3 RePOSA trial, enrolling patients who are non-compliant with or intolerant to CPAP therapy.
Over the coming quarters, investors can expect interim data from this study, including both objective efficacy measures and patient-centered endpoints.
Concurrently, we are maintaining close alignment with regulators to ensure the trial design supports eventual Phase 3 advancement and, ultimately, FDA submission.
We believe these milestones will continue to demonstrate IHL-42X’s potential as a first-in-class oral therapy for obstructive sleep apnea.
Clinical/ regulatory risks that could impact pipeline
Invezz: What are the clinical or regulatory risks that stand to impact your pipeline?
All clinical development programs carry inherent risks, from patient response variability to recruitment challenges and regulatory hurdles.
In cannabinoid and psychedelic-based therapies, these considerations are amplified by the rigorous regulatory oversight in both the US and internationally.
That said, our experienced team, careful trial design, and proactive engagement with regulators help us mitigate these risks as we advance toward pivotal trials.
Maintaining scientific rigor, patient safety, and regulatory compliance is at the core of our strategy.
On JV with Mind Medicine Australia and other plans for commercialisation
Invezz: You recently joined a JV (Joint Venture) with Mind Medicine Australia to further your commercialisation model. What other steps or partnerships do you plan to undertake for commercialisation of your therapies?
Strategic partnerships are a key part of our approach to scaling global access.
Beyond the Mind Medicine JV, we are evaluating collaborations, licensing agreements, and regional commercialisation opportunities that can accelerate market entry and expand patient access.
Our priority is to pair strong clinical validation with commercially viable models, ensuring our therapies reach patients safely, efficiently, and with the regulatory support required.
Rescheduling Cannabis can streamline clinical development for pharma companies
Invezz: US President Donald Trump recently spoke of looking at a proposal to reschedule cannabis from Schedule 1 to Schedule 3. Will the likely change bring the cannabis industry out of its slump?
Rescheduling cannabis could be a positive step for the broader industry, easing research restrictions and potentially improving patient access.
For pharmaceutical companies like Incannex, it may help streamline certain aspects of clinical development.
That said, long-term growth and credibility will continue to depend on demonstrating robust clinical outcomes, regulatory compliance, and reproducible results.
Scientific validation, not regulatory shifts alone, remains the cornerstone of meaningful progress.
Navigating federal vs state-level cannabis regulations in the US
Invezz: How do you navigate the uncertainties around federal vs. state-level cannabis regulations in the US, and what reforms would you like the government to undertake to boost the industry?
Navigating the US regulatory landscape requires careful attention to both federal and state requirements, ensuring all clinical and manufacturing activities meet applicable standards.
We advocate for reforms that clarify the legal status of medical cannabis, support pharmaceutical-grade research, and provide consistent regulatory pathways.
Clearer guidance would foster innovation, attract investment, and ultimately ensure patients have access to safe, effective, and clinically validated therapies.
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