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Currency in USD
Last close As at 09/06/2023
USD1.94
▲ −0.02 (−1.02%)
Market capitalisation
USD123m
Research: Healthcare
FY22 marked a busy year for Incannex Healthcare, focused on the expansion of its cannabinoid therapeutic portfolio through the acquisition of APIRx Pharmaceuticals and clinical progression of IHL-42X. The APIRx acquisition has resulted in a developmental pipeline consisting of 28 preclinical and clinical assets, providing Incannex with what we believe is one of the sector’s most diversified portfolios of medicinal cannabinoid drug formulations and psychedelic treatment regimes. We believe Incannex’s Nasdaq listing will enhance its reputation and shareholder base in the United States, providing further access to pools of capital. We value Incannex at US$714.7m or US$11.74 per ADR.
Incannex Healthcare |
Targeting FDA studies in FY23 |
FY22 results |
Pharma and biotech |
23 September 2022 |
Share price performance
Business description
Next events
Analysts
Incannex Healthcare is a research client of Edison Investment Research Limited |
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FY22 marked a busy year for Incannex Healthcare, focused on the expansion of its cannabinoid therapeutic portfolio through the acquisition of APIRx Pharmaceuticals and clinical progression of IHL-42X. The APIRx acquisition has resulted in a developmental pipeline consisting of 28 preclinical and clinical assets, providing Incannex with what we believe is one of the sector's most diversified portfolios of medicinal cannabinoid drug formulations and psychedelic treatment regimes. We believe Incannex’s Nasdaq listing will enhance its reputation and shareholder base in the United States, providing further access to pools of capital. We value Incannex at US$714.7m or US$11.74 per ADR.
Year end |
Revenue (A$m) |
PBT* |
EPS* |
DPS |
P/E |
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 |
0.0 |
(20.6) |
(1.38) |
0.0 |
N/A |
N/A |
06/24e |
0.0 |
(33.4) |
(2.24) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalized, excluding amortization of acquired intangibles, exceptional items and share-based payments.
Well-funded past future catalysts
Incannex completed two option exercise programs in Q122 and Q422, raising a total of A$41.2m and providing it sufficient cash to support operations into FY24, past interim readouts from the Psi-GAD Phase II study and potential initiation of FDA studies for IHL-42X. Total operating expenses for FY22 (A$15.7m) were higher than our estimates (A$10.1m), relating to increased clinical and regulatory costs, resulting in a net cash outflow from operating activities of A$12.8m (FY21: A$6.9m). We have revised our FY23 estimates due to the expected increase in costs as the company progresses its assets towards the clinic (FY23 net cash outflow from operating activities of A$21.4m, previously A$14.9m).
IHL-42X pivotal studies await
The positive results (see our initiation) from the Phase II Australian trial for IHL-42X in obstructive sleep apnea have paved the way for the company to pursue FDA-regulated studies. Having already agreed with the FDA that IHL-42X would forgo preclinical animal studies, management believes that the current data package for IHL-42X will support opening an investigational new drug application to initiate studies in FY23, which we believe represents a significant catalyst for the company.
Valuation: US$714.7m or US$11.74 per ADR
We value Incannex at US$714.7m or US$11.74 per ADR (US$695.7m or US$11.42 per ADR previously). Value uplift has been achieved by rolling our model forward. However, our underlying long-term assumptions remain unchanged. With a net cash position of A$37.5m at end FY22, we estimate this provides the company with a cash runway into CY H223 (ie H124). We expect Incannex will need to raise c A$70m (FY23: A$40m, FY24: A$30m) before reaching profitability in FY26.
Exhibit 1: Financial summary
Accounts: IFRS, year-end: 30 June, AUD$’000s |
|
|
2020 |
2021 |
2022 |
2023e |
2024e |
PROFIT & LOSS |
|
|
|
|
|
|
|
Total revenues |
|
|
822 |
1,973 |
789 |
77 |
79 |
Cost of sales |
|
|
(450) |
(912) |
(6) |
(6) |
(6) |
Gross profit |
|
|
372 |
1,061 |
782 |
71 |
72 |
Total operating expenses |
|
|
(4,301) |
(9,225) |
(15,686) |
(20,678) |
(33,482) |
Research and development expenses |
|
|
(2,111) |
(4,750) |
(5,372) |
(9,848) |
(21,600) |
SG&A |
|
|
(864) |
(1,236) |
(3,027) |
(3,399) |
(4,157) |
Operating income (reported) |
|
|
(3,929) |
(8,164) |
(14,904) |
(20,607) |
(33,409) |
Finance income/(expense) |
|
|
0 |
0 |
0 |
0 |
0 |
Exceptionals and adjustments |
|
|
0 |
0 |
0 |
0 |
0 |
Net loss from discontinued operations |
|
|
(768) |
0 |
0 |
0 |
0 |
Profit before tax (reported) |
|
|
(4,698) |
(8,164) |
(14,904) |
(20,607) |
(33,409) |
Profit before tax (normalised) |
|
|
(4,698) |
(8,164) |
(14,904) |
(20,607) |
(33,409) |
Income tax expense (includes exceptionals) |
|
|
0 |
0 |
0 |
0 |
0 |
Net income (reported) |
|
|
(4,698) |
(8,164) |
(14,904) |
(20,607) |
(33,409) |
Net income (normalised) |
|
|
(4,698) |
(8,164) |
(14,904) |
(20,607) |
(33,409) |
Basic average number of shares, m |
|
|
684.0 |
978.0 |
1,191.2 |
1,489.0 |
1,489.0 |
Basic EPS (c) |
|
|
(0.69) |
(0.83) |
(1.25) |
(1.38) |
(2.24) |
Adjusted EPS (c) |
|
|
(0.69) |
(0.83) |
(1.25) |
(1.38) |
(2.24) |
Dividend per share (c) |
|
|
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
BALANCE SHEET |
|
|
|
|
|
|
|
Tangible assets |
|
|
0 |
0 |
0 |
0 |
0 |
Intangible assets |
|
|
0 |
0 |
0 |
0 |
0 |
Right-of-use assets |
|
|
0 |
0 |
0 |
0 |
0 |
Other non-current assets |
|
|
0 |
0 |
0 |
0 |
0 |
Total non-current assets |
|
|
0 |
0 |
0 |
0 |
0 |
Cash and equivalents |
|
|
3,603 |
9,124 |
37,501 |
16,126 |
22,764 |
Current tax receivables |
|
|
0 |
0 |
0 |
0 |
0 |
Trade and other receivables |
|
|
413 |
169 |
295 |
292 |
307 |
Inventory |
|
|
183 |
0 |
0 |
0 |
0 |
Other current assets |
|
|
36 |
36 |
84 |
84 |
84 |
Total current assets |
|
|
4,236 |
9,329 |
37,880 |
16,502 |
23,155 |
Non-current loans and borrowings |
|
|
0 |
0 |
0 |
0 |
0 |
Non-current lease liabilities |
|
|
0 |
0 |
0 |
0 |
0 |
Other non-current liabilities |
|
|
0 |
0 |
0 |
0 |
0 |
Total non-current liabilities |
|
|
0 |
0 |
0 |
0 |
0 |
Accounts payable |
|
|
955 |
755 |
2,011 |
1,240 |
1,302 |
Illustrative debt |
|
|
0 |
0 |
0 |
0 |
40,000 |
Current lease obligations |
|
|
0 |
0 |
0 |
0 |
0 |
Other current liabilities |
|
|
117 |
0 |
0 |
0 |
0 |
Total current liabilities |
|
|
1,072 |
755 |
2,011 |
1,240 |
41,302 |
Equity attributable to company |
|
|
3,164 |
8,574 |
35,869 |
15,262 |
(18,147) |
CASH FLOW STATEMENT |
|
|
|
|
|
|
|
Operating income |
|
|
(4,698) |
(8,164) |
(14,904) |
(20,607) |
(33,409) |
Depreciation and amortisation |
|
|
37 |
0 |
0 |
0 |
0 |
Share based payments |
|
|
565 |
1,172 |
1,465 |
0 |
0 |
Other adjustments |
|
|
97 |
91 |
(594) |
0 |
0 |
Movements in working capital |
|
|
91 |
(10) |
1,226 |
(768) |
47 |
Cash from operations (CFO) |
|
|
(3,907) |
(6,910) |
(12,807) |
(21,375) |
(33,362) |
Capex |
|
|
13 |
0 |
0 |
0 |
0 |
Acquisitions & disposals net |
|
|
0 |
29 |
0 |
0 |
0 |
Other investing activities |
|
|
0 |
0 |
0 |
0 |
0 |
Cash used in investing activities (CFIA) |
|
|
13 |
29 |
0 |
0 |
0 |
Capital changes |
|
|
7,469 |
12,401 |
41,185 |
0 |
0 |
Debt Changes |
|
|
(65) |
0 |
0 |
0 |
40,000 |
Other financing activities |
|
|
0 |
0 |
0 |
0 |
0 |
Cash from financing activities (CFF) |
|
|
7,404 |
12,401 |
41,185 |
0 |
40,000 |
Cash and equivalents at beginning of period |
|
|
93 |
3,603 |
9,124 |
37,501 |
16,126 |
Increase/(decrease) in cash and equivalents |
|
|
3,510 |
5,520 |
28,377 |
(21,375) |
6,638 |
Effect of FX on cash and equivalents |
|
|
0 |
0 |
0 |
0 |
0 |
Cash and equivalents at end of period |
|
|
3,603 |
9,124 |
37,501 |
16,126 |
22,764 |
Net (debt)/cash |
|
|
3,603 |
9,124 |
37,501 |
16,126 |
22,764 |
Source: Incannex Healthcare, Edison Investment Research
|
|
Research: Investment Companies
Murray International Trust (MYI) employs a team-based approach, headed up by Bruce Stout working closely with Martin Connaghan and Samantha Fitzpatrick, who are part of abrdn’s global equity team. The trust offers investors a globally diversified portfolio of primarily equities (c 90%) with the balance in fixed income securities and cash, broadly split 50:50 between developed and emerging markets. MYI’s portfolio is constructed independently on a bottom-up basis without consideration of the make-up of its global reference index. Nevertheless, as shown in the chart below, the trust’s relative performance has improved over the last year, while it is now first out of the seven funds in the AIC global equity income sector over the last 12 months by quite some margin.
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