Incannex Healthcare — Encouraging signals from PsiGAD interim review

Incannex Healthcare (NASDAQ: IXHL)

Currency in USD

Last close As at 17/03/2023

USD2.18

−0.21 (−8.63%)

Market capitalisation

USD151m

Research: Healthcare

Incannex Healthcare — Encouraging signals from PsiGAD interim review

Incannex has reported positive interim safety data from its ongoing Phase II PsiGAD study. A review by an independent Data Safety Monitoring Board (DSMB) identified no safety concerns from the first 37 patients enrolled (expected to recruit 72 in total) in the trial and has recommended no changes to the study design. Additionally, based on the interim analysis of 29 patients who have completed the study protocol, the company projects a more than 85% probability that the psilocybin treatment arm will provide a statistically significant benefit over the placebo treatment arm of the study. While we advise caution in the interpretation of modelling projections to predict trial outcomes, these early observations of safety and potential efficacy, in our view, support the continuation of Incannex’s psilocybin-assisted psychotherapy program for generalized anxiety disorder (GAD). We see trial completion (expected by Q423) as a key upcoming catalyst.

Soo Romanoff

Written by

Soo Romanoff

Managing Director - Head of Content, Healthcare

Healthcare

Incannex Healthcare

Encouraging signals from PsiGAD interim review

Clinical development update

Pharma and biotech

15 March 2023

Price

US$2.3

Market cap

US$146m

ADR/Ord conversion ratio 1:25

US$/A$1.5

Net cash (A$m) at 31 December 2022

41.4

ADRs in issue

63.5m

ADR code

IXHL

ADR exchange

NASDAQ-GM

Underlying exchange

ASX

Depository

DBK

Share price performance

Business description

Incannex Healthcare is an Australian dual-listed biotech company focused on developing medicinal cannabis pharmaceutical products and psychedelic medicine therapies. These therapies are being designed to target indications with unmet need, including obstructive sleep apnea, generalized anxiety disorder, trauma and inflammatory conditions.

Analysts

Soo Romanoff

+44 (0)20 3077 5700

Adam McCarter

+44 (0)20 3077 5700

Jyoti Prakash, CFA

+44 (0)20 3077 5700

Incannex Healthcare is a research client of Edison Investment Research Limited

Incannex has reported positive interim safety data from its ongoing Phase II PsiGAD study. A review by an independent Data Safety Monitoring Board (DSMB) identified no safety concerns from the first 37 patients enrolled (expected to recruit 72 in total) in the trial and has recommended no changes to the study design. Additionally, based on the interim analysis of 29 patients who have completed the study protocol, the company projects a more than 85% probability that the psilocybin treatment arm will provide a statistically significant benefit over the placebo treatment arm of the study. While we advise caution in the interpretation of modelling projections to predict trial outcomes, these early observations of safety and potential efficacy, in our view, support the continuation of Incannex’s psilocybin-assisted psychotherapy program for generalized anxiety disorder (GAD). We see trial completion (expected by Q423) as a key upcoming catalyst.

Year end

Revenue (A$m)

PBT*
(A$m)

EPS*
(c)

DPS
(c)

P/E
(x)

Yield
(%)

06/21

2.0

(8.2)

(0.83)

0.0

N/A

N/A

06/22

0.8

(14.9)

(1.25)

0.0

N/A

N/A

06/23e

0.1

(20.7)

(1.43)

0.0

N/A

N/A

06/24e

0.1

(33.4)

(2.10)

0.0

N/A

N/A

Note: *PBT and EPS are normalized, excluding amortization of acquired intangibles, exceptional items and share-based payments.

The ongoing Phase II PsiGAD study is assessing the effectiveness of the psychedelic, psilocybin, in conjunction with psychotherapy in patients suffering from GAD. The study is a triple-blind, active placebo-controlled trial aiming to recruit a total of 72 patients. The primary endpoint of the study is a reduction in the Hamilton Anxiety Rating Scale (HAM-A) score at 11 weeks relative to baseline. The HAM-A scale is a clinically recognized method of measuring anxiety symptoms, which has been used to support FDA approval of treatments for GAD. Patient recruitment commenced in Q1 CY22 and, to date, more than 45 participants have been enrolled, of whom 29 have completed the 10-week treatment protocol. Treatment for all 72 participants is expected to complete by Q423. We note that Incannex’s observations on the potential statistically significant benefit of psilocybin are based on extrapolating the study results from the first 29 participants to the overall cohort of 72 patients and have not been independently verified by the DSMB.

As a reminder, in February 2023, the Australian regulatory authority, the Therapeutic Goods Administration, permitted (effective 1 July) the off-label prescription of therapeutics containing psilocybin (for treatment-resistant depression) and MDMA (for post-traumatic stress disorder) by psychiatrists under controlled conditions, marking a key step towards acceptance of psychedelics as therapeutic options for mental disorders. GAD afflicts more than 3% of the US population (c 6.8 million US adults) with c 50% of treated cases not responding to first-line treatment, highlighting the significant unmet need in the space.

Final data from the PsiGAD Phase II study (expected in Q423) will be used to support an investigational new drug application with the FDA, which we see as a key inflection point for Incannex.

General disclaimer and copyright

This report has been commissioned by Incannex Healthcare and prepared and issued by Edison, in consideration of a fee payable by Incannex Healthcare. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

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Copyright: Copyright 2023 Edison Investment Research Limited (Edison).

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This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

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Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

General disclaimer and copyright

This report has been commissioned by Incannex Healthcare and prepared and issued by Edison, in consideration of a fee payable by Incannex Healthcare. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2023 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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