DALLAS, TX -- May 28th, 2025 -- Incannex Healthcare Inc. (NasdaqGM:IXHL): Stonegate Capital Partners updates their coverage on Incannex Healthcare Inc. (NasdaqGM:IXHL). During the third quarter of fiscal year 2025, IXHL reported R&D expenses of $2.74M, down from $3.28M in the same quarter of the previous year, reflecting cost containment measures. SG&A expenses were $2.27M, compared to $4.14M in the prior year, driven by strategic cost-saving initiatives. The net loss for the quarter was reduced to $3.97M from $6.03M year-over-year, partly supported by improved operational efficiencies. Cash and cash equivalents totaled $6.7M, an increase from $2.1M as of 2Q24 end, due to recent financing activities and received R&D tax incentive payments.

Company Summary:

Financing and Capital Structure Update: IXHL has significantly strengthened its financial position through strategic financing arrangements designed to optimize capital structure and minimize dilution related to its Series A Warrants. Utilizing proceeds from the Company’s ATM, IXHL will issue a total of ~$24.7M worth of shares to repurchase all outstanding Series A Warrants representing 347.2M shares that could be dilutive. Of this total amount 175.2M warrants have already been canceled with the remaining shares subject to final execution, which we expect to be completed in the near term. These measures highlight management’s proactive approach to capital management, supporting the Company’s financial flexibility and providing a significant amount of visibility as investors await phase 2 top-line data.

IHL-42X Update: Significant clinical progress was made during the quarter with the completion of patient dosing in the Phase 2 portion of the global Phase 2/3 RePOSA trial evaluating IHL-42X, an oral fixed-dose combination of dronabinol and acetazolamide for OSA treatment. Topline results from this Phase 2 trial are anticipated in July 2025. The Company plans to conduct the Phase 3 portion of the trial exclusively in the U.S., optimizing operational efficiency based on strong enthusiasm from U.S. clinical sites and patients. Previous Phase 2 results demonstrated substantial reductions in Apnea- Hypopnea Index (AHI), positioning IHL-42X as a promising oral therapeutic candidate in a market currently dominated by mechanical devices

PSX-001 and IHL-675A Update: IXHL’s PSX-001, a psilocybin-based candidate for Generalized Anxiety Disorder (GAD), successfully achieved positive results from a Phase 2 proof-of-concept study. The Company has secured IND clearance from the FDA and Clinical Trial Authorization from the UK regulatory authorities for the PsiGAD2 Phase 2 trial, which will recruit 94 patients across the U.S. and U.K. Meanwhile, IHL-675A, targeting inflammation associated with rheumatoid arthritis, completed patient dosing in its Phase 2 trial with approximately 128 participants. Topline data from this study is expected in the second half of 2025, with future resources dedicated to a larger U.S. Phase 2 study, potentially accelerating its regulatory approval pathway.

Valuation: We use a probability-adjusted Discounted Cash Flow Model when valuing IXHL. Our valuation model returns a valuation range of $5.30 to $5.94 with a midpoint of $5.61 based on a discount rate range of 12.25% to 12.75% and a current risk adjustment range of 14% to 16%. Further details on our model can be found on page 5 of this report. We note that this model is highly levered to the out years due to the long term nature of IXHL's industry, leading to the potential for dramatic re-ratings as new information becomes available.

About Stonegate
Stonegate Capital Partners is a leading capital markets advisory firm providing investor relations, equity research, and institutional investor outreach services for public companies. Our affiliate, Stonegate Capital Markets (member FINRA) provides a full spectrum of investment banking services for public and private companies.

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