London, UK, 30 August 2022

Incannex Healthcare (IXHL): Initiation — Addressing unmet needs via unique approach

Incannex Healthcare is an Australian biotech specializing in the development of treatments for chronic conditions through a unique approach. Specifically, the company is investigating the use of cannabinoids and psychedelics, leveraging its synergistic combination intellectual property. Most recently, it has achieved proof-of-concept in Australia for IHL-42X, its lead asset for the treatment of obstructive sleep apnea (OSA). The company intends to file an investigational new drug application with the FDA (in CY Q422) following positive Phase II results from its Australian clinical trial data. Incannex is also progressing development of its (Australian) Phase II clinical asset, psilocybin, in combination with psychotherapy in generalized anxiety disorder (GAD). We value Incannex at US$695.7m or US$11.42 per ADR.

We value Incannex at US$695.7m or US$11.42 per ADR, based on a risk-adjusted NPV for IHL-42X in OSA and psilocybin in GAD. As of the end of June, the company had a net cash position of A$37.5m (US$26.1m). Based on the CY Q222 burn rate of A$3.9m (US$2.7m) and adjusted for the anticipated increase in R&D spending, we estimate that the company has a cash runway into CY H223 (ie H124).

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