Incannex Healthcare Ltd (ASX:IHL, NASDAQ:IXHL), one of the first ASX-listed companies to make forays into cannabinoid and psychedelic therapeutic drugs, originally launched as a direct-to-consumer dental business, disrupting the dental space.
“We constantly monitor market trends and look to innovate to create unrivalled products and therapies, and we formed a strategy to enter the medicinal cannabis research space about four years ago,” says CEO and managing director Joel Latham.
“We were one of the first companies in Australia to embark on that strategy and to successfully acquire the relevant licences needed for this research.
“We have built out a world-class team with Dr Sud Agarwal and Dr Mark Bleackley, and we decided to focus on developing novel combination drugs to treat unmet medical conditions."
Clinical asset strategy
A key plank of Incannex’s new strategy was to find indications where there were limited or no treatment options for patients – from there the company examined the size of the addressable market for those indications.
"For us to spend significant funds developing clinical assets, the total addressable market had to be a billion-dollars-plus across each target indication, and we needed to be able to secure IP and patent protection,” Latham explained.
“As we evolved over time those were the three main criteria as we started to look at what indications we were targeting and to bring world-leading expertise to our medical advisory team, scientific team and research team.
“That has helped get us to where we are today.”
Targeting obstructive sleep apnoea
In its time as a dental business, Incannex had worked to combat snoring conditions, so the team was familiar with obstructive sleep apnoea (OSA).
“We knew the space quite well, which put us in a unique position to develop our lead asset.”
There are no currently registered pharmaceutical options for OSA. The go-to treatment is a CPAP machine, which can be inconvenient, cumbersome, labour intensive and has a high drop off rate.
Incannex has developed a novel combination drug delivered by soft shell capsule, which gives the company a unique opportunity to take advantage of a significant unmet need in the market.
But it doesn’t stop with OSA. The company is targeting a range of other indications – anxiety, rheumatoid arthritis, traumatic brain injury, lung inflammation and inflammatory bowel disease.
“The key element of our strategy is to develop combination drugs, using existing data for key constituents, and potentially securing expedited review and registration with the FDA,” said Latham.
“For example, our asset IHL-675A, a multi-use drug targeting lung inflammation, rheumatoid arthritis and inflammatory bowel disease, is a combination of existing approved drugs – hydroxychloroquine and CBD.
Long and safe history of use
“There is a long and safe history of use of CBD and similar with HQ. Both drugs previously have been known and researched to suppress and treat inflammation.
“The strategy behind creating a proprietary combination drug was to have the constituents perform synergistically together and significantly outperform either of the standalone drugs as a combination multi-use drug.”
In preclinical trials, the company tested the combination drug IHL-675A against each drug as a standalone for the three indications and found that the combination drug significantly outperformed existing treatment options for each of these three indications.
“This has allowed us to launch three individual programs for each of the three indications,” Latham said.
The company has been moving nimbly through a challenging time for the health sector, shoring up its intellectual property position with patent coverage for its assets.
It also has a range of preclinical studies in the works and a pre investigational new drug (IND) meeting with the US Food and Drug Administration (FDA).
Based on feedback from the FDA, the company has been able to structure its clinical development pathway and plan for product registration with the FDA following clinical trials.
Large global addressable market
“With the lung inflammation model alone, we are targeting a $50-billion global addressable market per year, projected to grow at 3.7% annually, which is extraordinary,” said Latham.
“With the rheumatoid arthritis program we are targeting a $57-billion market and with inflammatory bowel disease, a $20 billion market with a projected annual growth rate of 4.8%.”
Recent wins under the belt
Incannex recently released preliminary Phase 2 proof of concept results for its lead asset – IHL-42X for OSA.
The condition is measured using the apnoea hypopnoea index (AHI). A lowered AHI indicates successful reduction of the OSA complaint.
At baseline, the average AHI was 42.84 for participants. For all IHL-42X treatment periods – using low, mid and high doses – the average AHI was 23.81, a 44.4% reduction compared to baseline AHI.
“From here we will be scaling into pivotal trials under an IND with the FDA – multi-site, multi-jurisdictional trials will be underway following our FDA pre-IND meeting in May,” Latham said.
And there are plenty of other developments in the pipeline, with six programs active and running in parallel, allowing for regular updates to share with the market.
The IHL-675A asset, which targets three indications in one, being lung inflammation, rheumatoid arthritis and inflammatory bowel disease is undergoing a Phase 1 study, while IHL-216A – targeting concussion and traumatic brain injury in partnership with Monash University – is being trialled in a Stage 2 preclinical study, with results expected in the next eight weeks.
Then there is the company’s psychedelic research program, in partnership with Monash University.
“We have received ethics approval to dose patients for psychedelic trial targeting anxiety and patient recruitment is well underway,” Latham said.
Regulatory environment for cannabinoids
While the Australian regulatory environment for cannabinoids may not be as advanced as it is in other jurisdictions such as the UK or the US, Latham thinks the research landscape is fertile.
In particular, he is proud of having built strong relationships with local trial sites and clinical research organisations.
“I see Australia as a research haven,” Latham said. “We are lucky to receive the R&D tax rebate, which makes it extremely lucrative to run clinical trials here in Australia.
“We also know and navigate the regulatory environment well and have been able to scale our trial quickly. We leverage off strong relationships in Australia, which allows us to progress each of our clinical assets in parallel at a relatively good pace.”
While post-clinical success, product registration and access in the Australian context can be more challenging, Latham says the company is working through this and over time the situation will improve.
“Importantly it offers companies like us the place to be able to develop the treatments and therapies that we have created, through research to commercialisation – it is a unique space,” Latham added.
“We are first and foremost an Australian business and we place quite an emphasis on developing and running as many projects as we can here locally to help support research throughout Australia.”
Unique hybrid model
Incannex’s point of difference is its hybrid model, as a major player in two emerging global markets – cannabinoid research and psychedelics.
It was the first company to investigate psychedelics that was listed on the ASX, and it has seen considerable growth in that sector over the past 18 months.
“When I look at what we offer investors, we’re targeting two emerging markets, which is unique in itself,” Latham said. “We are following a robust patent filing strategy, ensuring that we have IP coverage across our active proprietary programs and an experienced medical advisory and scientific team.
“Combine these factors with the upside potential of the size of the global markets that we are targeting on an annual basis – in excess of $120 billion across all of our programs.”
Timeline for commercialisation
“For our lead asset – IHL-42X for OSA – we’re working to a timeline between 24 and 36 months.
“But we firmly believe with the results we’ve received, the team we’ve built and the progress we’re making in the regulatory space, it’s realistic to have this product registered and on the market any time after 24 months, post clinical success,” Latham concluded.