Incannex's Sleep Apnea Drug Shows 83% Efficacy in Phase 2 Trial

Incannex Healthcare Inc. (NasdaqGM:IXHL) continues to make significant strides with its lead drug candidate IHL-42X for obstructive sleep apnoea (OSA), according to the latest coverage update from Stonegate Capital Partners. The company reported compelling Phase 2 RePOSA data showing both low- and high-dose IHL-42X achieved statistically significant reductions in Apnoea-Hypopnoea Index (AHI) versus placebo, with maximum AHI reductions reaching an impressive 83% in the high-dose arm and 79% in the low-dose cohort. Beyond the clinical metrics, exit interviews revealed that 57.6% of participants reported perceived improvement in their OSA, with most describing the change as meaningful to daily life, citing better sleep quality, reduced fatigue, and improved daily functioning. The drug demonstrated excellent tolerability across both dose cohorts, with no serious adverse events and mainly mild, transient treatment-emergent events, reinforcing its potential for broad patient adoption if approved.

Following two successful Phase 2 studies, Incannex is now pivoting IHL-42X from pure data generation toward regulatory and late-stage planning. The company is preparing for formal FDA interactions to define the registrational path, including Phase 3 design, primary and secondary endpoints, and potential expedited-review options. These efforts align with Incannex's 2025 priority to advance IHL-42X into pivotal development while maintaining capital discipline. The company exited 4Q25 with a strengthened financial position, having completed a substantial equity raise that generated $69.5 million in gross proceeds, bringing cash and cash equivalents to $73.3 million. Management has not utilized the ATM facility since August 2025, and the Board authorized a $20 million share repurchase program, providing flexibility to offset dilution while funding late-stage development.

Beyond IHL-42X, Incannex highlighted highly positive Phase 2 results for PSX-001 (Psi-GAD), its psilocybin-assisted psychotherapy program for generalized anxiety disorder, which showed statistically significant and clinically meaningful mean reduction in HAM-A scores. The treatment achieved a 44.1% response rate with 27% of patients reaching remission, positioning it as a second major value driver for the company. Meanwhile, IHL-675A remains in Phase 2 development for rheumatoid arthritis, representing a complementary anti-inflammatory platform asset. Stonegate Capital Partners, using a probability-adjusted Discounted Cash Flow Model, values IXHL in the range of $1.32 to $1.76 with a midpoint of $1.50, noting the potential for dramatic re-ratings as new clinical information emerges.