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Advancements for Anxiety, Sleep Apnea, Brain Injury, Lung Inflammation, Rheumatoid Arthritis & Inflammatory Bowel Disease: Incannex Healthcare Limited (NASDAQ: IXHL)

Advancements for Anxiety, Sleep Apnea, Brain Injury, Lung Inflammation, Rheumatoid Arthritis & Inflammatory Bowel Disease: Incannex Healthcare Limited (NASDAQ: IXHL)

– Developing Multiple Unique Cannabinoid & Psychedelic Medicine Therapies Targeted for U.S. FDA Approval and Registration.
– Completed Loyalty Option Program to Raise A$23.6M Primarily Allocated to Clinical R&D Program.
– Plans Underway to Acquire APIRx Pharmaceuticals USA, LLC.
– Substantial Reduction in AHI in Preliminary Results of Clinical Trial Assessing IHL-42X in Patients with OSA

Incannex Healthcare Limited (NASDAQ: IXHL), is an Australian based clinical stage pharmaceutical company that is developing unique medicinal cannabinoid pharmaceutical products and psychedelic medicine therapies for the treatment of anxiety disorders, obstructive sleep apnoea (OSA), traumatic brain injury (TBI)/concussion, lung inflammation (ARDS, COPD, asthma, bronchitis), rheumatoid arthritis and inflammatory bowel disease.

U.S. FDA approval and registration, subject to ongoing clinical success, is being pursued for each IXHL drug and therapy under development. Each indication represents major global markets and currently have no, or limited, existing registered pharmacotherapy (drug) treatments available to the public. IXHL has a strong patent filing strategy in place as it develops its products and therapies in conjunction with its medical and scientific advisory board and partners.

– IXHL Completes Loyalty Option Program to Raise A$23.6M; Current Cash is Approximately A$40.0M

On April 28th IXHL announced that it has finalized its loyalty option offer to shareholders to raise A$23.6M.

IXHL Loyalty options expired on April 22, 2022, and a total of 67.3M new shares are to be issued shortly as a result of the entitlement program. For every two (2) new shares that will be issued, one (1) piggy-back option will be granted to participants.

Piggy-back options will be issued shortly and have an exercise price of A$1.00 (equivalent to approx. US$18.25 per ADS on Nasdaq), expiring April 28, 2023. A total of 33.7M piggy-back options will be issued and Incannex does not intend to seek approval to list the piggy-back options on ASX or NASDAQ.

The Directors of IXHL collectively hold 175.9M shares in the Company and permitted their entitlement of approximately 11.7M shares, representing A$4.1M in investment capital, to be allocated to a strategic investor group that intend to enhance liquidity via the company’s ADS program on the NASDAQ exchange.

The additional capital will primarily be allocated to IXHL clinical research and development activities that are significantly ramping up in 2022 and 2023.

IXHL to Acquire APIRx Pharmaceuticals USA, LLC

Highlights:

– APIRx has twenty-two (22) active clinical and pre-clinical research and development projects
– therapeutic candidates are targeted at treating pain, dementia, Parkinson’s disease, restless leg syndrome, gastrointestinal diseases, periodontitis, addiction disorders, skin conditions and ophthalmic conditions
– therapeutic candidates are underpinned by an extensive intellectual property portfolio that includes 19 granted patents and 23 pending patents
– proposed acquisition price of US$93.3M in all scrip transaction
– the transaction affirms IXHL position as a global leader in the fields of cannabinoid, psychedelic, and combination pharmaceuticals.

On March 24th IXHL announced that it has executed a term sheet with binding commercial terms to wholly acquire APIRx Pharmaceutical USA, LLC (‘APIRx’), subject to shareholder approval under ASX listing Rule 7.1.

About APIRx – First Mover in Pharmaceutical Medicinal Cannabinoid Product Development

APIRx is an innovative biotechnology company focused on research, development, and production of prescription pharmaceutical cannabinoid medicines. It has twenty-two (22) active clinical and pre-clinical research and development projects utilizing proprietary technologies. The acquisition of APIRx brings to IXHL a diverse portfolio of promising therapeutic candidates targeted at treating an extensive range of conditions including pain, dementia, Parkinson’s Disease, restless leg syndrome, gastrointestinal diseases, periodontitis, addiction disorders, skin conditions and ophthalmic conditions.

APIRx was established as a corporate entity in the Netherlands to amalgamate the intellectual property assets of medicinal cannabis pioneers, and APIRx co-founders, Dr George Anastassov and Mr Lekhram Changoer. Dr Anastassov and Mr Changoer have collaborated since 2003 to develop the largest privately held patent portfolio pertaining to pharmaceutical cannabinoid inventions globally. They previously licensed their technology to AXIM Biotechnologies Inc., where they were part of the lead management team, overseeing a peak market capitalization of approximately US$1.2B in 2017 prior to the assets being privatized by APIRx.

Numerous pre-clinical studies and clinical trials over the APIRx therapeutic candidates have been undertaken to justify the intellectual property portfolio, which includes 19 granted patents and 23 pending patents. Key patents relate to sustained oral mucosal delivery of cannabinoids and cannabinoid combinations through chewing gum, oral care cannabinoid compositions, cannabinoid ophthalmic solutions, topical compositions containing cannabinoids and cannabinoid extraction technologies.

Medicated chewing gum (‘MCG’) is a novel drug delivery system growing in favor amongst the medical community due to widespread potential applications as an extended-release dosage form that provides a continuous release of the medicine contained. MCGs are fast acting as they release the active ingredients into the oral mucosa, reducing the potential for gastric intolerance amongst patients. These qualities, amongst others, make MCGs an excellent delivery system for medicinal combinations designed to treat sustaining pain and addiction disorders.

An example of a successful MCG is over-the-counter nicotine chewing gum (i.e., Nicabate for nicotine craving relief – noting this is not an APIRx product). A focus of the combined APIRx and Incannex group will be the ongoing development of APIRx’s CheWell, CanQuit and CanQuit-O cannabinoid combination MCGs to treat cannabis addiction, nicotine addiction and opioid addiction.

Strategic Rationale

The acquisition of APIRx will significantly strengthen the IXHL position as a market leader at the forefront of cannabinoid and psychedelic treatment development. It will:

– Add a large portfolio of intellectual property with granted and pending patents
– Expand the IXHL addressable markets globally and addressable market sizes by over US$400bn per annum
– Further enhance the IXHL technical and drug development capability by adding some of the industry’s longest standing and best-known scientists to the IXHL team.
– Expand the IXHL drug delivery capability to include APIRx’s patented delivery technologies.

APIRx will be entitled to nominate one board member to IXHL after completion of the proposed transaction.

APIRx Management – Dr George Anastassov and Mr Lekhram Changoer

Dr Anastassov and Mr Changoer are experienced clinical researchers with medical and scientific backgrounds. They will be employed by Incannex on a full-time basis following completion of the acquisition and will continue to drive the development of APIRx projects, whilst also assisting with the development of the Company’s existing projects. They are experienced with liaising and negotiating with the U.S. Food and Drug Administration (‘FDA’), having undertaken numerous pre- investigational new drug (‘IND’) meetings, and opening two (2) IND applications for the MedChew RL and the MedChew Dronabinol medicinal product candidates. Furthermore, APIRx has strong relationships with international academic institutions and research hospitals including Mount Sinai School of Medicine, New York (USA), University of St. Andrews (UK), Free University of Amsterdam (NL), University of Wageningen (NL), and Mauritsclinics (NL).

“We believe that bringing together Incannex and APIRx will bolster our position as a leader in the medicinal cannabinoid sector and will further set IHL apart from other players in the industry”, stated CEO and Managing Director of IXHL, Mr. Joel Latham. “With sizeable addressable markets and intellectual property spanning a multitude of unmet medical needs, we’re positioning Incannex to be a significant player in the pharmaceutical sectors of the future. I’m excited by this acquisition opportunity on multiple fronts and look forward to working with the APIRx team to deliver on our vision of providing treatments which will make genuine differences to the lives of millions of people”.

APIRx co-founder, Dr George Anastassov said; “We are delighted to partner with the IHL team as we believe that our extensive experience and broad IP asset base is perfectly positioned for further development and expansion within the IHL organization. Both companies have proven track records to deliver innovative projects and the goal of this transaction to create the global leader in the cannabinoid, psychedelic, and combination pharmaceuticals space. We intend to do this by innovatively addressing conditions for which there are only modest, or no safe and effective, treatment options”.

APIRx co-founder, Mr Lekhram Changoer said; “APIRx is bringing new drug delivery technologies backed by patents that, when combined with Incannex’s existing intellectual property, will result in IHL being a state-of-the-art, industry-leading cannabinoid and psychedelic platform. The drug products developed utilising this broader portfolio of technologies gives us the opportunity to develop, in the clinic, a diverse range of innovative products addressing significant unmet medical needs. A post-acquisition Incannex will also have greater presence in the United States and Europe, which may benefit the Company to more efficiently undertake multi-site clinical trials that will ultimately be required for FDA clinical trial programs aimed at drug approval”.

– Substantial Reduction in AHI in Preliminary Results of Clinical Trial Assessing IHL-42X in Patients with OSA

On March 10th IXHL announced the completion of a preliminary analysis of data from its phase 2, proof-of-concept clinical trial investigating novel cannabinoid combination product, IHL-42X, for the treatment of obstructive sleep apnoea (‘OSA’).

The clinical trial assessed three doses of IHL-42X at reducing the apnoea hypopnoea index (‘AHI’), the main diagnostic and monitoring criteria for OSA, compared to placebo in patients who suffered from the disease. Trial participants received each of the three doses of IHL-42X and placebo across four seven-day treatment periods, separated by one week washout periods. At the end of each treatment period, they attended the clinic for an overnight sleep study where AHI was determined, along with other measures of sleep quality, quality of life and drug safety. The study was conducted at the University of Western Australia Centre for Sleep Science and The Alfred Hospital.

A total of eleven participants were recruited to the study and ten participants completed treatment periods. The crossover design of the study permitted IXHL to generate high quality data with a reduced participant number compared to a conventional parallel arm study. Each participant serves as their own internal control and inter-participant variation is eliminated. The study included ten placebo treatment periods and twenty-six IHL-42X treatment periods totaling thirty-six AHI data points that were compared to baseline.

IXHL has undertaken preliminary analysis of the study data comparing the AHI during treatment with IHL-42X across all three dose levels or placebo to baseline. At baseline, the average AHI was 42.84. For all IHL-42X treatment periods (using low, mid, and high doses), the average AHI was 23.81, a 44.4 % reduction (p-value 0.0067) compared to baseline AHI. During placebo treatment periods, the average AHI was 40.08, a 6.4 % reduction (p-value 0.75) compared to baseline. 60% of participants experienced a reduction in AHI of greater than 50% (range: 55.0% to 91.5%) and a resulting AHI of less than 20 during at least one treatment period of one dose strength of IHL-42X. 20% of participants experienced a reduction in AHI of greater than 80% (range: 82.7% to 91.5%) relative to baseline during at least one treatment period of one dose strength of IHL-42X.

Specific data from the study, including which IHL-42X doses were received by which patient and when, remain blinded. Patient response to specific IHL-42X doses (low, mid, and high) and the secondary endpoints continue to be analyzed by contract research organization, Novotech, and will only be released to IXHL upon the completion of the analysis as per usual clinical trial processes. This will include a comparison between IHL-42X doses for each patient, which increases the power of the analysis, and provides a more robust differentiation of dose strengths. The full clinical study report is anticipated in Q2 2022.

Preliminary analysis also revealed that IHL-42X was observed to be well tolerated in the clinical trial. All treatment associated adverse events were consistent with what has been reported for constituent components of IHL-42X in historic studies.

OSA is the most common sleep-related breathing disorder, and it causes people to repeatedly stop and start breathing for elongated intervals during sleep. It is a major public health problem and IHL-42X represents a significant commercial opportunity for IXHL as there are no approved pharmacotherapy treatments available to patients at the present time.

OSA is a serious medical condition that increases the risk of numerous health complications1. Drops in blood oxygen levels that occur during OSA increase blood pressure and strain the cardiovascular system. Many people with OSA develop high blood pressure (hypertension), which can increase the risk of heart disease. The more severe the OSA, the greater the risk of coronary artery disease, heart attacks, heart failure and strokes.

People with OSA often have severe daytime drowsiness, fatigue, and irritability due to lack of restorative sleep at night, which are observed causes of workplace accidents. Those diagnosed with OSA are also at higher risk of memory problems, headaches, mood swings and depression.

OSA is highly prevalent, affecting approximately 30 million adults in the United States alone. It is estimated that the annual economic burden of undiagnosed sleep apnoea among U.S. adults is approximately US$149.6 billion per annum. These costs include US$86.9 billion in lost productivity, US$26.2 billion in motor vehicle accidents and US$6.5 billion in workplace accidents.

For more information on Incannex Healthcare Limited (NASDAQ: IXHL) visit: www.incannex.com.au

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