IXHL 10-K & 10-Q changes, risk factors and insider trading
Incannex Healthcare Inc. · Nasdaq · Pharmaceutical Preparations · CIK 1873875 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Disruptions at the FDA and other government agencies caused by funding shortages or staffing reductions could prevent new or modified products from being developed, approved or commercialized in a timely manner or at all, which could negatively impact our business.”
New heading “Our employees, independent contractors, consultants, vendors and future commercial partners, if any, may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.”
New heading “Inadequate funding for the FDA, the SEC and other government agencies could hinder their ability to hire and retain key leadership and other personnel, prevent new products and services from being developed or commercialized in a timely manner, or otherwise prevent those agencies from performing normal business functions on which the operation of ours’s business may rely, which could negatively impact our business.”
New heading “For as long as we are an “emerging growth company” we have taken advantage, and intend to continue to take advantage, of reduced disclosure and governance requirements applicable to emerging growth companies, which could result in our common stock being less attractive to investors and could make it more difficult for us to raise capital as and when we need it.”
Removed heading “We cannot guarantee that our share repurchase program will be utilized to the full value approved, if at all, or that it will enhance long-term stockholder value. Any repurchases we consummate could increase the volatility of the price of our common stock and could have a negative impact on our available cash balance.”
Removed heading “In May 2025, our stockholders authorized us to complete a reverse stock split of our common stock which our board of directors may elect to do in an effort to regain compliance with the Nasdaq minimum bid price requirements (the “Minimum Bid Price Rule”). Following a reverse stock split, the resulting market price of our Common Stock may not attract new investors, including institutional investors, and may not satisfy the investing requirements of those investors and may decline in greater proportion than the ratio of a reverse stock split. Consequently, the trading liquidity of our Common Stock may be adversely affected if we complete a reverse stock split.”
Largest changes
“In addition, we may use artificial intelligence and machine learning technologies in various aspects of our business operations, including drug discovery, clinical trial design, data analysis, and administrative functions. The development, deployment, and use of AI technologies present unique risks and challenges, including potential biases in AI outputs, lack of transparency in AI decision-making processes, data privacy concerns related to AI training data, and regulatory uncertainty. …”see in full comparison
“We have adopted a code of business conduct and ethics, but it is not always possible to identify and deter misconduct by employees and third parties, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting we from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws. …”see in full comparison
“In May 2025, our stockholders authorized us to complete a reverse stock split of our common stock which our board of directors may elect to do in an effort to regain compliance with the Nasdaq minimum bid price requirements (the “Minimum Bid Price Rule”). Following a reverse stock split, the resulting market price of our Common Stock may not attract new investors, including institutional investors, and may not satisfy the investing requirements of those investors and may decline in greater proportion than the ratio of a reverse stock split. …”see in full comparison
“•State-Controlled Substance Laws. Individual states have also established controlled substance laws and regulations. We, our third-party manufacturers, our distributors or our other partners must obtain applicable DEA and state registrations, permits or licenses, as applicable, in order to be able to obtain, manufacture, process, handle, distribute, import or export controlled substances for clinical trials or commercial sale. While some states automatically schedule a drug based on federal action, other states schedule drugs through rulemaking or a legislative action. …”see in full comparison
“In addition, under FTC policies, failing to take appropriate steps to keep consumers’ personal information secure, or failing to provide a level of security commensurate to promises made to individual about the security of their personal information (such as in a privacy notice), may constitute unfair or deceptive acts or practices in violation of Section 5(a) of the Federal Trade Commission Act, even when HIPAA does not apply. …”see in full comparison
We have identified a material weakness in our internal controls over financial reporting. If we fail to maintain an effective system of internal control over financialsee in full comparisonreporting,reporting or fail to remediate this material weakness, we may not be able to accurately report our financial results or prevent fraud, which could have a material adverse effect on our stock price.
Full comparison: every changed paragraph (195)
•We have a history of operating losses and may not achieve or maintain profitability in the future. Our ability to achieve profitability depends on the successful development of our drug candidates.
•We rely on R&D tax incentives to provide resources to conduct our business operations. If the amount of R&D tax incentives decreases, our results of operations and cash resources may be materially affected.
•We expect that we will need substantial additional funding to continue the development of our drug candidates. If we are unable to raise capital when needed or to do so on terms that are favorable to us, we could again be forced to delay, reduce or eliminate our development programs or commercialization efforts or reduce or scale back our operations.
•If we do not obtain the necessary regulatory approvals, we will be unable to commercialize our drug candidates.
•Clinical drug development involves a lengthy and expensive process with uncertain outcomes. The results of earlier preclinical studies or trials may not be predictive of the results of later clinical trials. Clinical trials are difficult to design and implement, and any of our clinical trials could produce unsuccessful results or fail at any stage in the process.
•Topline, interim or preliminary data from our trials may not be representative of final results.
•We rely on third parties to conduct our preclinical and clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may not be able to obtain regulatory approval for or commercialize our drug candidates and our business could be substantially harmed.
•Even if we receive marketing approval of a drug candidate, we will be subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense and we may be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated problems with our products, if approved.
•Our drug candidates will be subject to controlled substance laws and regulations. Failure to receive necessary approvals may delay the launch of our drug candidates and failure to comply with these laws and regulations may adversely affect the results of our business operations.
•The production and sale of our drug candidates may be considered illegal or may otherwise be restricted due to the use of controlled substances, which may have consequences for the legality of investments from international jurisdictions.
•Our R&D efforts will be jeopardized if we are unable to retain key personnel and cultivate key academic and scientific collaborations.
•Our business is subject to complex and evolving U.S. federal and state, and international laws and regulations, imposing obligations on how we collect, use, disclose, store and process personal data. We are also subject to information security policies and contractual obligations relating to privacy and data protection, including the use, processing, and cross-border transfer of personal data. The actual or perceived failure by us or vendors to comply with these laws and regulations, policies and contractual obligations could harm our business and/or reputation, and subject us to significant fines and liability.
•We are exposed to fluctuations in exchange rates which may adversely affect our operating results.
•Our success depends on our ability to protect our intellectual property and our proprietary technology, and we may not be able to protect our intellectual property rights throughout the world.
•If we are unable to obtain and maintain patent protection for any drug candidates, our competitors could develop and commercialize products or technology similar or identical to ours, and our ability to successfully commercialize any drug candidates we may develop, and our technology may be adversely affected. We are currently exploring a patent protection strategy for our candidate PSX-001. If these efforts are unsuccessful, we may not be able to obtain intellectual property protection for this candidate.
General Risks and Risks Related to Investing in Our Securities
•The price of our common stock has been and may continue to be highly volatile, which may make it difficult for stockholders to sell our common stock when desired or at attractive prices.
•Our common stock could be further diluted as the result of the issuance of additional shares of common stock, warrants, options or other convertible securities. Future sales of shares of our common stock in the public market, or the perception that such sales could occur, has in the past and could in the future cause our stock price to fall.
We have experienced significant recurring operating
losses and negative cash flows from operating activities since inception. For example, for the fiscal years ended June 20242026 and 2025,
we had total comprehensive losses of $46.7$19.8 million and $18.5of $46.7 million, respectively, and we had negative cash flows from operating activities
of $12.5$12.9 million and $5.8$12.5 million, respectively. As of June 30, 2025,2026, we had accumulated comprehensive losses of $157.6$176.9 million.
We
expect to continue to incur losses from operations for the foreseeable future and expect the costs of drug development to increase in
the future as more patients are recruited for our clinical trials. Because of the numerous risks and uncertainties associated with the
research, development and manufacturing of our drug candidates, we may experience larger than expected future losses and, particularly
if we fail to successfully develop one or more of our drug candidates, we may never become profitable or if we become profitable, main
maintain profitability.
In fiscal 20242026 and 2025, respectively, we received
$1.7 $4.7 million and $11.4$1.8 millionmillion, respectively, in R&D tax incentives from the Australian government as a result of the clinical trials activities
conducted in Australia. In Australia, entities are entitled to either (i) a 48.5% refundable tax offset for eligible companies with an
aggregated turnover of less than A$20 million per annum or (ii) a non-refundable 38.5% tax offset for all other eligible companies. Our
aggregated turnover is less than A$20 million and not controlled by one or more income tax exempt entities. We anticipate being entitled
to a claim of 48.5% refundable tax offset for costs relating to eligible R&D activities during the year. Such incentives provide material
resources to conduct our business operations.
To date, we have not generated any revenue from product sales to customers and none of our drug candidates have been approved for commercialization by any regulatory body. We do not expect to receive any material revenue from any drug candidates that we develop, including IHL-42X, PSX-001, and IHL-675A, unless and until we obtain regulatory approval for these candidates. The development of IHL-675A is at an earlier stage and has been deprioritized relative to our lead programs for IHL-42X and PSX-001, and as a result, IHL-675A may take significantly longer to reach a point where it could generate revenue, if it does at all. Our future net losses will depend, in large part, on our success in developing our drug candidates. Correspondingly, the amount of our future net losses will depend, in part, on the rate of our future expenditures.
•continue our research and preclinical and clinical development of our drug candidates;
•expand the scope of our current proposed clinical studies for our drug candidates;
•initiate additional preclinical, clinical or other studies for our drug candidates;
•change or add manufacturers or suppliers;
•seek regulatory and marketing approvals for our drug candidates that successfully complete clinical studies;
•seek to identify and validate additional drug candidates;
•acquire or in-license other drug candidates and technologies;
•maintain, protect and expand our intellectual property portfolio;
•attract and retain skilled personnel;
•create additional infrastructure to support our operations as a publicly quoted company and our product development and planned future commercialization efforts; and
•experience any delays or encounter issues with any of the above.
Our ability to obtain additional financing will
be subject to a number of factors, including market conditions, our operating performance and investor sentiment. As such, additional
financing may not be available to us when needed, on acceptable terms, or at all. In addition, disruptions and volatility in recent years
in the financial markets have made equity and debt financing more difficult to obtain and may have a material adverse effect on our ability
to meet our fundraising needs. DuringWe the past year, we delayed the development ofterminated our drugAustralian candidatePhase 2 clinical trial of IHL-675A due to aenrollment lackchallenges ofand financial
resources.reallocated resources to our lead programs for IHL-42X and PSX-001. We continue to evaluate strategies for IHL-675A when and as resources permit. If we are again unable to secure sufficient capital to fund our operations, then we may be required to again delay, limit,
reduce or terminate our drug development or future commercialization efforts or grant rights to third parties to develop and market drug
candidates that we would otherwise prefer to develop and market ourselves. Moreover, we could also have to relinquish valuable rights
to our technologies, future revenue streams, research programs or drug candidates or grant licenses on terms that may not be favorable
to us.
We have identified a material weakness in our internal controls over financial reporting. If
we fail to maintain an effective system of internal control over financial reporting,reporting or fail to remediate this material weakness, we may not be able to accurately report our financial
results or prevent fraud, which could have a material adverse effect on our stock price.
Any failure to design and implement an effective
system of internal controls may reveal deficiencies in our internal controls that are deemed to be material weaknesses. A material weakness
is defined as a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable
possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
Management has concluded that we did not maintain effective disclosure controls and procedures due to the material weakness in internal
control over financial reporting which existed as of June 30, 2025,2026. relatingDue to the documentationlimited number of accounting policiespersonnel we employ in light of the size and procedures,
particularlynature relatingof our business, our Chief Financial Officer initiates, oversees and approves financial reporting activities without an independent internal review control. Journal entries and reporting adjustments are also communicated by our Chief Financial Officer to a third party for processing. As the correctpreparation, applicationreview and approval processes ultimately remain directed by our Chief Financial Officer, effective segregation of complexduties accountinghas measures.not been achieved. The measures that we are undertaking to remediate the
material weakness in internal control over financial reporting have and will include: (i) hiring qualified internal control personnel
or consultants to manage the implementation of internal control policies, procedures and improvement of the internal audit function, as
applicable; (ii) developing and implementing written policies and procedures for accounting and financial reporting that meet the standards
applied to public companies listed in the United States; and (iii) conducting internal control training to management, key operations
personnel and the accounting department, so that management and relevant personnel understand the requirements and elements of internal
control over financial reporting mandated by the U.S. securities laws. Further, we have implemented a series of manual checks and balances to verify that the initiation, approval and recording of certain financial transactions in the current and prior reporting periods has been properly authorized and recorded.
If
we are unable to maintain or regain compliance with the requirements of the Nasdaq Stock Market (“Nasdaq”), this could result
in the delisting of our common stock. A delisting of our common stock from Nasdaq could adversely affect our ability to raise additional
capital through the public or private sale of equity securities, the ability of investors to dispose shares of our common stock or obtain
accurate quotations as to the market value of our common stock and the price and value of our common stock.
Our common stock is currently
listed on the Nasdaq Capital Market. The requirements for all Nasdaq market tiers, including the Nasdaq Capital Market, impose a minimum
$1.00 per share bid price requirement. To comply with this requirement, the closing price for our common stock must not fall below $1.00
for a 30 consecutive trading day period. SinceIn earlythe Marchfirst half of 2025, the closing bid price for our common stock haswas consistently been below
$1.00 per share, and on April 23, 2025, we received a written notice (the “Notice”) from the Listing Qualifications Department
(the “Staff”) of Nasdaq notifying the us that, because the closing bid price for our common stock, closed below $1.00 per
share for 30 consecutive trading days, we no longer met the minimum bid price requirement for continued inclusion on Nasdaq pursuant to
Nasdaq Listing Rule 5450(a)(1) (the “Bid Price Requirement”). The Staff provided us with an initial grace periodperiod, expiring
which expired on October 20, 2025. To regain compliance the closing price of our common stock must exceed a minimum of $1.00 per share for at least
10 consecutive trading days2025, and potentiallylater 20 consecutive trading days in the discretion of the Staff. On or following October 20, 2025,
the Staff may providegranted us with an additional 180-day180-calendar-day compliance period inextension, which weexpired mayon seekApril to20, regain compliance with the Minium Bid Price
Rule, but there can be no guarantee that such an additional compliance period will be granted or that we will regain compliance within
this additional 180-day compliance period.2026.
On February 24, 2026, we filed with the Secretary of State of the State of Delaware an amendment (the “Certificate of Amendment”) to our amended and restated certificate of incorporation, as amended (the “Certificate of Incorporation”), to effect a reverse stock split of our common stock at a ratio of 1-for-30 (the “Reverse Stock Split”) to regain compliance with the Bid Price Requirement. Subsequently, on March 16, 2026, we received a letter from the Staff indicating that we were once again in compliance with the Bid Price Requirement. All share and per share amounts have been retrospectively adjusted to reflect the reverse stock split. See page F-13 for further information.
However, we may fail to maintain long-term compliance with the Bid Price Requirement. If we are unable to comply with a listing requirement of the Nasdaq Capital Market, including the Bid Price Requirement, shares of our common stock would likely be delisted.
In
the event of a delisting notice, we would typically have an opportunity to appeal such decision to the Nasdaq Hearing Panel or take other
measures to preserve the listing ofIf our common stock on Nasdaq, but these measures and any appeal may not be successful. If our common
stock is delisted by Nasdaq, our common stock may be eligible to trade on an over-the-counter quotation system, where an investor may
find it more difficult to sell our common stock or obtain accurate quotations as to the market value of our common stock.
We
cannot guarantee that our share repurchase program will be utilized to the full value approved, if at all, or that it will
enhance long-term stockholder value. Any repurchases we consummate could increase the volatility of the price of our common stock and
could have a negative impact on our available cash balance.
Our board of directors authorized
a share repurchase program pursuant to which we may repurchase up to $20 million of our common stock. The manner, timing and
amount of any share repurchases may fluctuate and will be determined by us based on a variety of factors, including the market price of
our common stock, our priorities for the use of cash to support our business operations and plans, general business and market conditions,
tax laws, and alternative investment opportunities. The share repurchase program authorization does not obligate us to acquire
any specific number or dollar value of shares. Further, our share repurchases could have an impact on our share trading prices, increase
the volatility of the price of our common stock, or reduce our available cash balance such that we will be required to seek financing
to support our operations. Our share repurchase program may be modified, suspended, or terminated at any time, which may result
in a decrease in the trading prices of our common stock. Even if our share repurchase program is fully implemented, it may not
enhance long-term stockholder value. Additionally, repurchases are subject to the 1% share repurchase excise tax enacted by the IRA, which
may be offset by shares newly issued during that fiscal year. We have and will continue to take the share repurchase excise tax into account
with respect to our decisions to repurchase shares.
For example, following completion of the Phase 2 portion of the RePOSA Study and subsequent FDA interactions, we determined not to proceed with the Phase 3 portion of the RePOSA Study as originally designed and instead commenced the DReAMzz Study, a Phase 2 dose-optimization study, in May 2026. Changes to our clinical development strategy, including the need for additional studies or design modifications based on regulatory feedback, may further delay the timeline for regulatory approval of our drug candidates.
•delay or failure in reaching agreement with the FDA or a comparable international regulatory authority on a trial design that we are able to execute;
•delay or failure in obtaining authorization to commence a trial, including approval from the appropriate IRB to conduct testing of a candidate on human subjects, or inability to comply with conditions imposed by a regulatory authority regarding the scope or design of a clinical trial;
•delay in reaching, or failure to reach, agreement on acceptable terms with prospective CROs, and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;
•inability, delay or failure in identifying and maintaining a sufficient number of trial sites, many of which may already be engaged in other clinical programs;
•delay or failure in recruiting and enrolling suitable volunteers or patients to participate in a trial such as occurred in our prior trial investigating IHL-675A;
•delay or failure in developing and validating companion diagnostics, if they are deemed necessary, on a timely basis;
•failure of trial participants to complete a trial or return for post-treatment follow-up;
•inability to monitor trial participants adequately during or after treatment;
•clinical sites and investigators deviating from trial protocols, failing to conduct the trial in accordance with regulatory requirements or dropping out of a trial;
•failure to initiate or delay of or inability to complete a clinical trial as a result of a clinical hold imposed by the FDA or comparable international regulatory authority due to observed safety findings or other reasons;
•negative or inconclusive results in our clinical trials, and our decision to or regulators’ requirement that we conduct additional non-clinical studies, clinical trials or that we abandon one or more of our product development programs; or
•inability to manufacture sufficient quantities of a drug candidate of acceptable quality for use in clinical trials.
•the eligibility criteria defined in the protocol;
•the size of the patient population required for analysis of the trial’s primary endpoints;
•the nature of the trial protocol;
•the proximity of potential subjects to clinical sites;
Management's Discussion & Analysis (MD&A)
New heading “Financing Arrangements”
New heading “Fair Value of Financial Instruments”
Removed heading “Recent Developments”
Removed heading “ATM Program Increase”
Removed heading “Acquisition of IPR&D”
Largest changes
“PSX-001, our other lead drug candidate in clinical development following completion of a Phase 2 trial, is an oral synthetic psilocybin treatment, administered in combination with psychological therapy for patients with moderate-to-severe GAD. We completed a Phase 2 clinical trial, known as PsiGAD1, in the results of which we observed that the combination of synthetic psilocybin with psychotherapy significantly reduced anxiety scores and was well-tolerated in GAD patients. …”see in full comparison
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We are a clinical-stage biopharmaceutical company developing oral fixed-dose combination therapies and psychedelic-assisted treatments for serious chronic conditions. Our principal development priority is IHL-42X for obstructive sleep apnea. We are also evaluating the next clinical development plan for PSX-001 in generalized anxiety disorder and the potential for further development of IHL-675A in inflammatory conditions. Our aim is to offer patients additional treatment options where existing care does not adequately meet their needs.
IHL-42X, our lead drug candidate for the treatment of OSA, is an oral fixed-dose combination of dronabinol and acetazolamide designed to act synergistically by targeting two different physiological pathways associated with the intermittent hypoxia and hypercapnia that characterize OSA. We completed the Phase 2 portion of our RePOSA Phase 2/3 clinical trial, or the RePOSA Study, in July 2025, in which we observed that IHL-42X reduced AHI, improved patient reported outcome measures and was well-tolerated in OSA patients. In December 2025, the FDA granted Fast Track designation for IHL-42X for the treatment of OSA. We have determined to conduct an additional dose confirmation study, the DReAMzz Study, to further optimize the ratio of dronabinol and acetazolamide prior to advancing into a Phase 3 clinical trial of IHL-42X. The DReAMzz Study is a Phase 2 dose confirmation crossover trial evaluating nine dose combinations of IHL-42X across approximately 120 subjects at 14 U.S. clinical sites. This study commenced in May 2026, began screening participants in July 2026, is currently enrolling participants, and is estimated to be completed in mid-2027. Results from the DReAMzz Study are expected to inform the design of a planned Phase 3 clinical trial for IHL-42X.
PSX-001, our other lead drug candidate in clinical development following completion of a Phase 2 trial, is an oral synthetic psilocybin treatment, administered in combination with psychological therapy for patients with moderate-to-severe GAD. We completed a Phase 2 clinical trial, known as PsiGAD1, in the results of which we observed that the combination of synthetic psilocybin with psychotherapy significantly reduced anxiety scores and was well-tolerated in GAD patients. In this trial, statistically meaningful reductions in HAM-A scores were observed, with subjects in the investigational arm achieving an average 12.8-point reduction from baseline that was sustained for an 11-week follow up period. A greater than 50% reduction in HAM-A scores was observed in 44.1% of subjects receiving the experimental treatment and 27% of subjects in the treatment arm achieved full disease remission, a number five times higher than placebo. Improvements were also observed in secondary endpoint measures. PSX-001 was observed to be well-tolerated with no serious adverse events reported and only a single discontinuation across 73 patients. The majority of TEAEs were transient, mild to moderate in nature and consistent with the expected pharmacological effects of psilocybin. No signs of increased suicidality, psychosis, or prolonged psychological distress, concerns often cited with psychedelic treatments, were observed. We have a cleared IND application with the FDA. We are assessing options for the next steps in development of this asset, including adjustments to the design of the Phase 2 study.
IHL-675A is our drug candidate for the treatment of inflammatory conditions, with an initial focus on rheumatoid arthritis. IHL-675A is an oral fixed-dose combination of CBD and hydroxychloroquine sulfate designed to target two different pathways, acting synergistically to alleviate inflammation. In our Phase 1 clinical trial, IHL-675A was observed to be well-tolerated and bioavailable. In preclinical studies, IHL-675A was observed to reduce inflammatory markers and disease scores across multiple animal inflammatory disease models and in vitro assays. We initiated an Australian Phase 2 trial investigating IHL-675A in rheumatoid arthritis patients; however, in November 2024, we paused patient recruitment due to slower than anticipated enrollment and subsequently terminated the trial. Insufficient data was collected to make any conclusions on safety or efficacy of IHL-675A. We continue to assess the potential development strategies for IHL-675A in the treatment of rheumatoid arthritis and other inflammatory conditions while resource and capital allocation is focused on development of our lead assets.
These programs address distinct treatment needs. IHL-42X is being developed as an oral option for OSA, PSX-001 combines a pharmaceutical treatment with structured psychological therapy for GAD, and IHL-675A investigated a combination approach to inflammation. Our development priorities reflect the evidence available for each program and the work required to advance it to its next clinical milestone.
We are a clinical-stage biopharmaceutical development
company dedicated to developing innovative medicines for patients living with serious chronic diseases and significant unmet needs. Our
lead drug candidates include IHL-42X for the treatment of OSA; PSX-001, our psilocybin treatment in combination with psychological therapy
in development to treat patients with GAD; and IHL-675A for rheumatoid arthritis. Each of these programs target conditions that currently
have limited, inadequate, or no approved pharmaceutical treatment options.
Recent Developments
ATM Program Increase
On July 24, 2025, we filed a prospectus supplement
to increase the capacity of our existing “at-the-market” offering program (the “ATM”) by up to an additional
$100 million. While this filing increases the available capacity under the ATM, we are under no obligation to issue any shares of our
commons stock pursuant to the program. The expanded facility is intended to enhance our financial flexibility, providing an efficient
mechanism to access capital if, and when, deemed appropriate. Any utilization of the ATM will be at our discretion, taking into account
prevailing market conditions and strategic priorities.
As previously disclosed,
the ATM is conducted pursuant to the Amended and Restated Sales Agreement, dated May 28, 2025 (the “Amended and Restated Sales Agreement”)
by and among us, A.G.P./Alliance Global Partners (“A.G.P.”) and Curvature Securities, LLC (“Curvature,” and together
with A.G.P, the “Sales Agents”). Accordingly, pursuant to the prospectus supplement, the amount of shares of our common stock
that we may issue under the Amended and Restated Sales Agreement has been increased by up to an aggregate of $100 million of shares of
our common stock. There can be no assurance that the Sales Agents will be able to complete future placements pursuant to the Amended and
Restated Sales Agreement, even if instructed to do so. The number of shares of our common stock that we may ultimately sell under the
Amended and Restated Sales Agreement will fluctuate based on a number of factors, including the market price of our common stock during
the sales period, the limits it may set in any instruction to sell Shares, and the demand for our common stock during an applicable sales
period.
Comparison of Fiscal YearsYear Ended June 30, 20252026 to June 30, 20242025
During the fiscal year
ended June 30, 2025, we generated revenue from clinic patients for rehabilitation services. This figure reflects the consideration to
which the Company expects to be entitled in exchange for those services. Revenue increased approximately 617% when compared to revenues
generated duringDuring the fiscal year ended June 202430, primarily2026, asthe aCompany resultdid ofnot ourgenerate expansionany ofrevenue thesefrom services.clinic patients for rehabilitation services We have not generated any revenue
from the sale of products. We do not expect to generate material revenues unless and until our drug candidates are approved.
•external costs incurred under agreements with CROs, contract manufacturers, consultants and other third parties to conduct and support our clinical trials and preclinical studies; and
•internal costs, including R&D personnel-related expenses such as salaries, and benefits, as well as allocated facilities costs and dues and subscriptions.
R&D expenses decreased by $2.1$5.5 million for
the fiscal year ended June 30, 20252026 compared to the fiscal year ended June 30, 2024.2025. The decrease was primarily due to athe pausetiming in our
development activities that occurred duringof the fiscal year ended June 30, 2025 for resource conservation reasons. We have since resumed
development activities for allcompletion of ourthe leadRePOSA drugStudy candidates.and commencement of the DReAMzz Study.
•the number and scope, rate of progress, expense and results of our clinical trials and preclinical studies, including any modifications to clinical development plans based on feedback that we may receive from regulatory authorities;
•per patient trial costs;
•the number of trials required for approval;
•the number of sites included in the trials;
•the countries in which the trials are conducted;
•the length of time required to enroll eligible patients;
•the number of patients that participate in the trials;
•the number of doses that patients receive;
•the drop-out or discontinuation rates of patients;
•the potential additional safety monitoring requested by regulatory agencies;
•the duration of patient participation in the trials and follow-up;
•the cost and timing of manufacturing of our drug candidates;
•the costs, if any, of obtaining third-party drugs for use in our combination trials;
•the extent of changes in government regulation and regulatory guidance;
•the efficacy and safety profile of our drug candidates;
•the timing, receipt, and terms of any approvals from applicable regulatory authorities; and
•the extent to which we establish additional collaboration, license, or other arrangements.
Acquisition of IPR&D
Acquisition of IPR&D expense was recorded in the fiscal year ended
June 30, 2024, in connection with the acquisition of APIRx Pharmaceutical USA, LLC (“APIRx”) in August 2022. We concluded
that the acquisition of APIRx did not meet the definition of business under Accounting Standards Codification (“ASC”) 805,
Business Combinations as APIRx did not have outputs present and a substantive process was not acquired and recorded the transaction as
an asset acquisition as a result. We determined that drug candidates pertaining to APIRx had no alternative future use at the time of
acquisition and charged $35.3 million, including transaction costs of $2.43 million, to the acquisition of IPR&D expense as of the
date of acquisition.
General and administrative
expenses consist primarily of personnel-related expensesexpenses, finance and accounting, human resources and other administrative functions,
including salaries, stock-based compensation and benefits for employees, legal fees, expenses relating to patent and corporate matters
and professional fees paid for accounting, auditing, consulting and tax services, as well as facilities-related costs not otherwise included
in R&D expenses and other costs such as insurance costs and travel expenses.
General and administrative expenses decreasedincreased by
$4.0 $4.7 million for the fiscal year ended June 30, 20252026 compared to the fiscal year ended June 30, 2024.2025. The decreaseincrease was mainlyprimarily driven by a $5.0 million increase in stock-based compensation expense (from $2.6 million to $7.6 million), reflecting increased amortization of equity awards granted in May 2025. There is also a slight increase by a $0.3 million in salaries and other employee benefits (from $4.2 million to $4.5 million), primarily due to a
decreasethe ofadditional $6.3middle millionmanagement (frompersonnel $8.9hired millionor toretained $2.6 million) in equity compensation and benefits for employees and directors, primarily
driven by less amortization expense incurred asduring the equityperiod. compensationThese wasincreases issued in May 2025 (compared to the prior period the equity
compensation was issued in December 2024). This decrease waswere partially offset by ana increase of $1.4$0.3 million (from $2.8 million to $4.2
million)decrease in salaries, and other employee benefits, which resulted from the appointment of Chief Medical Officer and additional middle
management positions during the period. Additionally, compliance, legal and regulatory expenses increased(from by$3.9 million to $3.6 million), and a $0.3 million decrease in advertising and investor relations expenses (from $0.8 million (from $3.1 million
to $3.9$0.5 million) primarily due to enhanced reporting obligations..
Benefit from R&D tax credit decreasedincreased by $9.7
$2.9 million (from $11.4$1.8 million to $1.8$4.7 million) for the fiscal year ended June 30, 20252026 compared to the fiscal year ended June 30, 2024.
2025. The decreaseincrease was primarily dueattributable to thean multipleincrease years of tax incentives being granted and successful lodgement of overseas findings on the
Company’s lead assets, which we revisedin the estimatesCompany's for theestimated R&D tax incentive receivable,receivable primarilyresulting basedfrom onexpanded historicaleligibility experience
offor claimscertain R&D expenditures incurred in the fiscal yearyears ended June 30, 2024.2026 and 2025.
Foreign exchange losses increaseddecreased by $0.3 million
for the fiscal year ended June 30, 20252026 compared to the fiscal year ended June 30, 2024,2025, primarily due to unfavorablefavorable currency exchange
rates during the period.
On October 17, 2024, we issued a convertible debenture
as part of a financing arrangement. The convertible debenture was repaid in full on March 13, 2025, and the convertible rights associated
with the convertible debenture were derecognized along with the debt repayment. The changes in the fair value of the convertible rights
amounted to $0.3 million for the fiscal year ended June 30, 2025.
In 20242025 and 20252026, wethe Company issued warrants in connection
with ourits equity line of credit financing, convertible debenture financing and private investment in public equity financing.financing Thesetransactions, including warrants
issued in March 2026. Certain of these warrants were subsequentlyclassified exercisedas liabilities and measured at fair value, with changes in fair value recognized in profit or cancelledloss. laterAs duringa result of the year.remeasurement Theof these warrant liabilities, the changes in the fair value of warrant liabilities amounted to $21.9
a loss of $0.6 million for the fiscal year ended June 30, 2025.2026.
We entered into an equity line of credit purchase agreement in September 2024 and as part of that arrangement, we issued shares as a commitment fee to secure the equity line of credit facility. The commitment fee expense incurred for the fiscal year ended June 30, 2025 as a result of these share issuances was $1.1 million.
Currency translation adjustment, net of tax increased
decreased by $0.3$0.7 million for the fiscal year ended June 30, 20252026 compared to the fiscal year ended June 30, 2024.2025. The increasedecrease resulted primarily
from the translation of financial statements from the functional currency to U.S. dollars. For certain of our international subsidiaries,
the local currency is the functional currency, and their financial statements are then translated into U.S. dollars for reporting purposes.
See Note 2 to our financial statements included in this Annual Report for further information, under the heading “Foreign Currency
Translation.”
We incurred total comprehensive losses of $46.7
$19.8 million and $18.5$46.7 million for the fiscal years ended June 30, 20252026 and 2024,June 30, 2025, respectively. The increasedecrease in net loss iswas primarily attributable to
a $24.3$26.9 million increasein drivenfinancing-related bylosses financingrecognized activities,during the fiscal year ended June 30, 2025, including changes in the fair value of warrants and convertible debt, as well
as loss on extinguishment of debt which were not incurred to the same extent during the fiscal year ended June 30, 2025. As of June 30, 2025, we had accumulated comprehensive losses
of $157.6 million.2026.
As of June 30, 2025,2026, we had cash and cash equivalents
of $15.0$67.7 million. Although we expect our negative cash flows from operating activities to continue, weWe believe our current cash balances,
together with anticipated cash flows and available financing arrangements, provide sufficient resources to meet our obligations and sustain
operations for at least one year from the issuance date of the financial statements in this Annual Report.
For the fiscal year ended June 30, 2025,2026, we
experienced net cash outflows from operating activities of $12.5$12.9 million, aan decreaseincrease of $3.3$0.4 million compared to the fiscal year ended
June 30, 2024.2025. As of June 30, 2025,2026, we had cash and cash equivalents of $15.0$67.7 million, an increase of $9.2$52.7 million compared to our cash
and cash equivalents as of June 30, 20242025 of $5.9$15.0 million. As of June 30, 2025,2026, our current assets exceed our current liabilities by $13.0
$71.3 million, a $2.4$58.4 million increase compared to the difference between our current assets and current liabilities as of June 30, 20242025 of
$10.6 $13.0 million.
As of the date of this Annual Report, we believe there is no longer substantial doubt about our ability to continue as a going concern. Although we have not yet established an ongoing source of revenue sufficient to cover all operating and capital expenditure requirements, including any potential payments pursuant to debentures, recent improvements in our financial position provide reasonable assurance that we will continue as a going concern for at least twelve months from the date of the financial statements. We expect to continue to require substantial capital to fund our operations beyond this period.
Historically, we have financed our operations
to date primarily through partnerships, funds received from public offerings of common stock, a debt financing facility, as well as funding
from governmental bodies. We continue to plan for additional capital through the sale of common stock in public offerings and/or private
placements, debt financings, or through other capital sources, including pursuant to the ATM,sources collaborations with other companies or
other strategic transactions. While there can be no assurance that these plans will be completed successfully or at all, our current
financial position and resources mitigate prior concerns related to going concern uncertainties.
During the three months ended June 30, 2025, we sold 163,283,465 shares
of common stock for aggregate gross proceeds of $40.2 million and net proceeds of approximately $38.7 million after deducting $1.5 million
in commissions payable to the sales agent. As of September 29,24, 2025,2026, our unrestricted cash and cash equivalents were $73.4$68.4 million. Based
on our unrestricted cash and cash equivalents as of September 29,24, 2025,2026, we anticipate that we will be able to fund our planned operating
expenses and capital expenditure requirements for at least twelve months from the date of the financial statements included in this Annual
Report. We have based these estimates on assumptions that may prove to be wrong, and we could use our capital resources sooner than we
currently expect. Inflation has not had a material impact on our operations or financial condition during the periods presented; however, sustained inflationary pressures could increase the cost of clinical trials, third-party manufacturing and general administration, which could cause us to use our cash resources faster than currently anticipated.
Net cash used in operating activities decreased
increased by $3.3$0.4 million in the fiscal year ended June 30, 20252026 compared to the fiscal year ended June 30, 2024.2025. The decreaseincrease was primarily driven
by a $6.3 million reductiondecrease in share-basedtrade compensationand expenseother payables of $3.5 million (from $8.9an increase of $1.4 million in 2025 to $2.6a decrease of $2.1 million in 2026) and a decrease in cash paidgenerated related
tofrom trademovements andin otherthe payablesR&D tax incentive receivable of $1.6$5.8 million (from $3.0an inflow of $5.6 million in 2025 to $1.4an outflow of $0.2 million in 2026), partially offset by an increase in R&Dshare-based taxcompensation incentive
receivedexpense of $15.4$4.9 million (from outflow of $9.8$2.6 million to inflow of $5.6$7.6 million).
Net cash used in investing activities decreased
increased by $0.3$0.1 million in the fiscal year ended June 30, 20252026 compared to fiscal year ended June 30, 2024.2025. The decreaseincrease was duedriven to lessby spending
on property,investment plantof andjoint equipment.venture.
Cash provided by financing activities increased
by $21.4$44.5 million in the fiscal year ended June 30, 2025,2026, compared to the fiscal year ended June 30, 2024.2025. ThisThe increase was primarily
driven by an increase in share issuance proceeds of $30.3 million (from $48.3 million,million in 2025 to $78.7 million in 2026), partially offset by cashshare outflows related to financing arrangements entered into
during the year, including the cancellationrepurchases of warrants$9.4 amountingmillion, toshare $24.8issuance costs of $3.1 million and thewarrant repaymentissuance costs of convertible$0.3 debtmillion totalingincurred $3.8
million.during 2026. The share repurchase program expired in August 2026.
Financing Arrangements
We routinely enter into financing transactions that may include equity-linked instruments, warrants, conversion features and other complex contractual terms. The accounting for these arrangements requires significant judgment in evaluating the terms of the agreements and determining the appropriate classification and measurement of the related financial instruments. Changes in the interpretation of contractual terms or underlying assumptions may materially affect the amounts recognized in the financial statements.
Fair Value of Financial Instruments
Certain financial instruments, including warrant liabilities are recorded at fair value. Determining the fair value of these instruments requires significant judgment and the use of estimates, including expected volatility, risk-free interest rates, expected term, probability-weighted financing outcomes and other market-based assumptions. Changes in these assumption could have a material impact on the estimated fair value of these instruments and the corresponding gains or losses recognized in the consolidated statement of operations and comprehensive losses.
Benefit from R&D tax credit consists of the
R&D tax credit received in Australia, which is recorded within other income (expense), net. The Company recognizes grants once both
of the following conditions are met: (i) the Company is able to comply with the relevant conditions of the grant and (ii) the grant is
will be received.
•the last day of the fiscal year following the fifth anniversary of the date of the completion of the first sale of common equity securities pursuant to an effective registration statement under the Securities Act;
•the last day of the fiscal year in which our total annual gross revenue is equal to or more than $1.235 billion;
•the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years;
•or the date on which we are deemed to be a large accelerated filer under the rules of the SEC.
What changed in the latest 10-Q
Risk Factors
There have been no material changes to the risk factors set forth in Part I, Item 1A, “Risk Factors,” of the 2025 Annual Report.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
New heading “Recent Developments”
New heading “Reverse Stock Split”
New heading “March 2026 Offering”
New heading “March 2026 Common Warrants”
Removed heading “Comparison of the Three and Six Months Ended December 31, 2025 and 2024”
Removed heading “Comparison of cash flows for the six months ended December 31, 2025 and 2024”
Largest changes
“We are a clinical-stage biopharmaceutical company dedicated to developing innovative combination therapies for patients living with serious chronic conditions and significant unmet needs. Our lead clinical program, IHL-42X, is an oral fixed-dose combination of dronabinol and acetazolamide for the treatment of obstructive sleep apnea (“OSA”). IHL-42X has completed a Phase 2 clinical program (RePOSA) with positive results, has been granted Fast Track designation by the U.S. …”see in full comparison
“Comparison of cash flows for the six months ended December 31, 2025 and 2024”see in full comparison
“Comparison of the Three and Six Months Ended December 31, 2025 and 2024”see in full comparison
Full comparison: every changed paragraph (43)
The
following discussion should be read in conjunction
with the unaudited condensed consolidated financial statements and notes thereto included
elsewhere in this Quarterly Report on Form 10-Q
(this “Quarterly Report”). This Quarterly Report contains forward-looking
statements. This discussion and analysis contain
forward looking statements and involves numerous risks and uncertainties, including,
but not limited to, those described in the “Risk
Factors” section in our Annual Report on Form 10-K,10-K for the fiscal year ended
June 30, 2025, as filed with the Securities and Exchange Commission (the “SEC”) on September 29, 2025 (the “2025 Annual
Report”).
We caution the reader not to place undue reliance on these forward-looking statements, which reflect management’s
analysis only
as of the date of this Quarterly Report. We undertake no obligation to update forward-looking statements, which reflect
events or circumstances
occurring after the date of this Quarterly Report.
We are a clinical-stage biopharmaceutical company dedicated to developing innovative combination therapies for patients living with serious chronic conditions and significant unmet needs. Our lead clinical program, IHL-42X, is an oral fixed-dose combination of dronabinol and acetazolamide for the treatment of obstructive sleep apnea (“OSA”). IHL-42X has completed a Phase 2 clinical program (RePOSA) with positive results, has been granted Fast Track designation by the U.S. Food and Drug Administration (“FDA”), and is currently being evaluated in the DReAMzz Phase 2 crossover dose-optimization study designed to further refine the dosing profile ahead of a planned Phase 3 registration program. PSX-001 is an oral synthetic psilocybin treatment in combination with psychological therapy for generalized anxiety disorder (“GAD”). PSX-001 has completed a Phase 2 proof-of-concept trial (PsiGAD1) with positive results, and we have received FDA approval of an Investigational New Drug application for PsiGAD2, a Phase 2b dose-comparison study being conducted at sites in the United States and the United Kingdom. IHL-675A is an oral fixed-dose combination of cannabidiol and hydroxychloroquine sulfate for rheumatoid arthritis, and is currently in Phase 2 clinical development. Each of these programs targets conditions that currently have limited, inadequate, or no approved pharmaceutical treatment options.
Recent Developments
Reverse Stock Split
On February 24, 2026, we filed with the Secretary of State of the State of Delaware an amendment (the “Certificate of Amendment”) to our amended and restated certificate of incorporation, as amended (the “Certificate of Incorporation”), to effect a reverse stock split of our common stock, par value $0.0001 per share (the “Common Stock”), at a ratio of 1-for-30 (the “Reverse Stock Split”). Pursuant to the Certificate of Amendment, the Reverse Stock Split became effective as of 4:01 p.m. Eastern Time on February 26, 2026 (the “Effective Time”) and shares of our Common Stock began trading on a post-split basis at the open of trading on The Nasdaq Capital Market on February 27, 2026. At the Effective Time, every 30 shares of our issued and outstanding shares of Common Stock automatically converted into one share of Common Stock, without any change in the par value per share. In addition, proportionate adjustments were made to the per share exercise price and the number of shares issuable upon the exercise of all outstanding equity awards, and to the number of shares issued and issuable under our stock incentive plans. No change was made to the number of shares of Common Stock authorized under the Certificate of Incorporation. No fractional shares were issued in connection with the Reverse Stock Split. Stockholders of record who otherwise would have been entitled to receive fractional shares because they held a number of shares not evenly divisible by the Reverse Stock Split ratio were automatically entitled to receive an additional fraction of a share of Common Stock to round up to the next whole share. With respect to outstanding Common Stock held in “street name” through a bank, broker or other nominee, fractional shares were rounded up at the participant level. Cash was not paid for fractional shares.
March 2026 Offering
On March 12, 2026, we entered into a Securities Purchase Agreement (the “March 2026 Purchase Agreement”) with certain institutional investors (the “March 2026 Investors”), pursuant to which we issued and sold, in a registered direct offering (the “March 2026 Offering”) (i) an aggregate of 1,997,285 shares of our Common Stock, (ii) pre-funded warrants to purchase up to 2,715 shares of our Common Stock (the “March 2026 Pre-Funded Warrants”), and (iii) common stock warrants to purchase up to 2,000,000 shares of our Common Stock (the “March 2026 Common Warrants”) at a combined purchase price of $5.00 per March 2026 Share and accompanying March 2026 Common Warrant, or $4.9999 per March 2026 Pre-Funded Warrant and accompanying March 2026 Common Warrant. The March 2026 Common Warrants are exercisable for a period of five years commencing upon issuance, at an exercise price of $6.50 per share, subject to certain adjustments set forth therein. The March 2026 Pre-Funded Warrants became exercisable upon issuance and expire upon the exercise of the March 2026 Pre-Funded Warrants in full, at an exercise price of $0.0001 per share, subject to certain adjustments set forth therein. The aggregate gross proceeds to the Company from the March 2026 Offering were approximately $10 million before deducting the placement agent’s fees and related offering expenses.
We are a clinical-stage biopharmaceutical development
company dedicated to developing innovative medicines for patients living with serious chronic diseases and significant unmet needs. Our
lead drug candidates, which are currently in Phase 2/3 and Phase 2 clinical developments, include IHL-42X for the treatment of OSA; PSX-001,
our psilocybin treatment in combination with psychological therapy in development to treat patients with GAD; and IHL-675A for rheumatoid
arthritis. Each of these programs target conditions that currently have limited, inadequate, or no approved pharmaceutical treatment options.
Comparison of the Three and
Six Months Ended December 31, 2025 and 2024
Comparison of the Three and Nine Months Ended March 31, 2026 and 2025 The following tables summarize our results of operations for the periods presented (in thousands):
We
have not generated revenue for the three and sixnine months endedend DecemberMarch 31,
2025, 2026 and we do not
expect to generate material revenuerevenues unless and until our drug candidates are approved.
Research and development expenses increaseddecreased by $0.9
2.4 million for the
three months ended DecemberMarch 31, 20252026 compared to the three months ended DecemberMarch 31, 2024.2025 and by 3.3 million for
the nine months ended March 31, 2026 compared to the nine months ended March 31, 2025. The increasedecrease was primarily due to the
completion late-stage
and close-out costs associated withof the IHL-42X safety and pharmacokinetics clinical trial. TheseR&D costsexpenses for the period were partiallyprimarily offsetrelated byto thePSX-001
and pausing
of patient recruitment in the Australian Phase 2IHL-42X clinical trialtrials forand IHL-675Ascientific, inmarketing, rheumatoidand arthritis.advertising subscription services.
Research and development expenses decreased by $0.9 million for the
six months ended December 31, 2025 compared to the six months ended December 31, 2024. The decrease was primarily due to the
completion of the IHL-42X safety and pharmacokinetics clinical trial and the pausing of patient recruitment in the Australian Phase 2
clinical trial for IHL-675A in rheumatoid arthritis. These decisions were made to reallocate resources for the IHL675A program and focus
on expanding research efforts in the United States, where an expedited regulatory pathway may be available. We have since resumed development
activities for this candidate. The primary R&D expense for the period was the Phase 2/3 RePOSA clinical trial investigating IHL-42X
in patients with OSA.
We
generally expect research and development costs to increase as we
progress our drug candidates
through clinical trials.trials, including with respect to our Phase 2 crossover dose-optimization study (DReAMzz) investigating IHL-42X in patients
with OSA. Although research and development activities are central to our business model,
the successful development of our drug
candidates is highly uncertain. There are numerous factors associated with the successful development
of our drug candidates, including
future trial design and various regulatory requirements, many of which cannot be determined with accuracy
at this time based on our stage
of development. In addition, future regulatory factors beyond our control may impact our clinical development
programs. Drug candidates
in later stages of clinical development generally have higher development costs than those in earlier stages
of clinical development,
primarily due to the increased size and duration of later stage clinical trials. As a result, we expect our research
and development
expenses will increase substantially in connection with our ongoing and planned clinical and preclinical development activities
in the
near term and in the future to the extent our development activities are successful. At this time, we cannot accurately estimate
or know
the nature, timing and costs of the efforts that will be necessary to complete the preclinical and clinical development of our
drug candidates.
Our research and development expenses have varied, and our future research and development expenses may vary, significantly
based on
a wide variety of factors such as:
General
and administrative expenses increased by $1.1$1.5 million for the
three months ended DecemberMarch 31, 20252026 compared to the three months ended December
March 31, 2024.2025. The increase was primarily attributable to increasesincrease in recognition of amortized stock-based payment expenses in
the current quarter and additional consulting
charges including recurring monthly fees from advisory firms.quarter.
General
and administrative expenses increased by $3.4$4.8 million for the
six nine months ended DecemberMarch 31, 20252026 compared to the sixnine months ended December
March 31, 2024.2025. The increase was primarily attributable
to increases in recognition of amortized stock-based payment expenses in
the current quarter and additional consulting charges including
recurring monthly fees from advisory firms.
Benefit
from R&D tax creditincentives
Benefit from
R&D tax incentive decreased
by $0.5$0.3 million for the three months ended DecemberMarch 31, 20252026 compared to the three months ended DecemberMarch 31, 2024.
2025. The
decrease in the R&D tax incentive receivable for the three months ended DecemberMarch 31, 2025,2026, was primarily due to a lower
estimate basedBenefit onfrom
R&D historicaltax experienceincentive ofdecreased claims.by $1.2 million for the nine months ended March 31, 2026 compared to the nine months ended March 31,
2025. The decrease in the R&D tax incentive receivable for the nine months ended March 31, 2026, was primarily due to a lower
estimate.
Benefit from R&D tax incentive decreased by
$0.9 million for the six months ended December 31, 2025 compared to the six months ended December 31, 2024. The decrease in
the R&D tax incentive receivable for the six months ended December 31, 2025, was primarily due to a lower estimate based on historical
experience of claims.
Foreign exchange gains/(losses) and Interest Income
Foreign exchange
lossesgains decreased by $0.3 million$16,000 for the three months ended DecemberMarch 31, 20252026 compared to the three months ended DecemberMarch 31,
2024, 2025, due
to favorableunfavorable currency exchange rates. Interest income decreaseincreased over the same period, reflecting lowerhigher interest received from cash
cash deposits.
Foreign
exchange losses decreased by $0.3 million
for the sixnine months ended DecemberMarch 31, 20252026 compared to the sixnine months ended DecemberMarch 31, 2024,
2025, due to favorable currency exchange
rates. Interest income decreaseddecrease over the same period, reflecting lower interest received from
cash deposits.
Share
of earnings (loss) of joint venture increased by $17,000$44,000 for the sixthree months ended DecemberMarch 31, 2025,2026, compared to the sixthree months
ended DecemberMarch 31, 2024,
2025, due to the losses generated from the Company’s investment in Mind Clinics Australia.
Share of loss of joint venture increased by $28,000 for the nine months ended March 31, 2026, compared to the nine months ended March 31, 2025, due to the losses generated from the Company’s investment in Mind Clinics Australia.
Currency
translation adjustment, net of tax, decreasedincreased by $0.1$0.4 million
for the three months ended DecemberMarch 31, 2025,2026, compared to the three months
ended DecemberMarch 31, 2024.2025. The increase was due to
the appreciation of the Australian dollar against the U.S. dollar Currency
translation adjustment, net of tax, increased by $0.4 million for the nine months ended March 31, 2026, compared to the nine months
ended March 31, 2025. The increase was due to the appreciation of
the Australian dollar against the U.S. dollar.
Currency translation adjustment, net of tax, increased by $0.1 million
for the six months ended December 31, 2025, compared to the six months ended December 31, 2024. The increase was due to the
appreciation of the Australian dollar against the U.S. dollar. We maintain our consolidated financial statements in Australian dollars,
our functional currency, while our financial statements are translated into U.S. dollars for reporting purposes.
We
incurred total comprehensive losses of $13.0
$17.3 million and $11.4$15.4 million for the sixnine months ended DecemberMarch 31, 20252026 and sixnine months
ended DecemberMarch 31, 2024,2025, respectively. We
incurred net losses of $12.9$4.4 million and $11.3$4.1 million for the sixnine months ended DecemberMarch 31,
2026 and nine months ended March 31, 2025 and 2024,2025, respectively. As of DecemberMarch 31,
2025, 2026, we had accumulated deficit of $170.5$174.4 million.
For the sixnine months ended DecemberMarch 31, 2025,2026, we experienced net cash used in operating
activities of $13.8$16.2 million, an increase of $6.0
$5.2 million compared to the sixnine months ended DecemberMarch 31, 2024. In addition, during
the three and six months ended December 31, 2025, the Company repurchased 3.1 million shares of its Common Stock at an aggregate cost
of $1.2 million under the share repurchase program. The Company will continue to assess market conditions and may deploy the buyback program
at its discretion as appropriate.2025.
In addition, during nine months ended March 31, 2026, we repurchased 0.4 million shares of our Common Stock at an aggregate cost of $2.3 million under the share repurchase program. Subsequent to quarter-end, from April 1, 2026 through May 15, 2026, we have repurchased an additional 1.7 million shares of our Common Stock under the share repurchase program for aggregate consideration of approximately $6.8 million. In total to date, we have repurchased 2.1 million shares of our Common Stock under the share repurchase program for aggregate consideration of approximately $9.1 million. We will continue to assess market conditions and may deploy the share repurchase program in its discretion as appropriate.
Historically, the Company has financed its operations
to date primarily through partnerships, funds received from public offerings of common stock, a debt financing facility, as well as funding
from governmental bodies.
As of December 31, 2025, we had cash and cash equivalents of $68.9 million, an increase of $53.9 million
compared to our cash and cash equivalents as of June 30, 2025 of $15.0 million. As of December
31, 2025, our current assets exceed our current liabilities by $72.0 million, a $59.9 million increase compared to the difference
between our current assets and current liabilities as of June 30, 2025 of $13.0 million. Although we expect our negative cash flows
from operating activities to continue, we believe our current cash balances, together with anticipated cash flows and available financing
arrangements, provide sufficient resources to meet our obligations and sustain operations for at least one year from the issuance date
of the financial statements included in this Quarterly Report. However, we could use our capital resources sooner than we expect. Our
operating plans may change, and we may need additional funds sooner than planned. The process of testing drug candidates in pre-clinical
and clinical studies is costly, and the timing of progress in studies is uncertain. Because the outcome of these efforts is uncertain,
we cannot estimate the actual amounts necessary to successfully complete the development and commercialization of our drug candidates
or whether, or when, we may achieve profitability.
Our
material cash requirements for the next twelve months are expected to consist primarily of costs associated with our clinical development
activities, payments to contract research organizations, contract manufacturers and consultants, personnel and public-company costs,
lease obligations and other working capital needs. Over the longer term, our cash requirements will depend on the timing, scope and results
of our clinical development programs, regulatory interactions, manufacturing activities and any commercialization activities if we obtain
regulatory approval for any drug candidate. Historically, the Company has financed its operations to date primarily through partnerships,
funds received from public offerings of Common Stock, a debt financing facility, as well as funding from governmental bodies. Until such
time as we can generate product revenues, if ever, we expect to finance our cash needs through the sale of commonCommon stockStock in
public offerings
and/or private placements, debt financings, or through other capital sources, including pursuant to the at-the-market
offering program,
collaborations with other companies or other strategic transactions. During the three months ended December 31, 2025,
we sold 4,525,000 shares of our common stock pursuant to our at-the-market offering program. We paid commissions and fees of $75,000 to
the sales agents in connection with these sales, resulting in net proceeds of $2.1 million. Any additional equity fundraising in the capital
markets may be
dilutive for our stockholders. To the extent that we raise additional capital through the sale of equity, convertible debt
or other securities
convertible into equity, the ownership interest of our stockholders will be diluted, and the terms of new securities
may include liquidation
or other preferences that adversely affect rights of our stockholders. Debt financing, if available at all, would
likely involve agreements
that include covenants limiting or restricting our ability to take specific actions, such as incurring additional
debt, making capital
expenditures, completing acquisitions or declaring or paying dividends. If we raise additional funds through strategic collaborations
collaborations or licensing arrangements with third parties, we may have to relinquish valuable rights to our drug candidates or future
revenue streams
or grant licenses on terms that are not favorable to us.
As of March 31, 2026, we had cash and cash equivalents of $74.5 million, an increase of $59.4 million compared to our cash and cash equivalents as of June 30, 2025 of $15.0 million. As of March 31, 2026, our current assets exceed our current liabilities by $78.2 million, a $65.2 million increase compared to the difference between our current assets and current liabilities as of June 30, 2025 of $13.0 million. Although we expect our negative cash flows from operating activities to continue, we believe our current cash balances, together with anticipated cash flows and available financing arrangements, provide sufficient resources to meet our obligations and sustain operations for at least one year from the issuance date of the financial statements included in this Quarterly Report. However, we could use our capital resources sooner than we expect. Our operating plans may change, and we may need additional funds sooner than planned. The process of testing drug candidates in pre-clinical and clinical studies is costly, and the timing of progress in studies is uncertain. Because the outcome of these efforts is uncertain, we cannot estimate the actual amounts necessary to successfully complete the development and commercialization of our drug candidates or whether, or when, we may achieve profitability.
Comparison of cash flows for the six months ended December 31,
2025 and 2024
Comparison of cash flows for the nine months ended March 31, 2026 and 2025 The following table summarizes our cash flows for the periods presented (in thousands):
Cash
used in operating activities increased by $5.9$5.2 million for the
six nine months ended DecemberMarch 31, 2025,2026, compared to the sixnine months ended December
March 31, 2024.2025. The increase was due to a decrease in
trade and other payables.
Cash
used in investing activities increased by $38,000$56,000 for the six
nine months ended DecemberMarch 31, 20252026 compared to the sixnine months ended DecemberMarch 31, 2024.
2025. The increase was due to our investment in
Mind Medicine Australia.
Cash
provided by financing activities increased
by $64.1$61.0 million for the sixnine months ended DecemberMarch 31, 2025,2026, compared to the sixnine months
ended DecemberMarch 31, 2024.2025. The increase
was due to stock issuances under our at-the-market offering program offsettingand withthe stockMarch 2026 Offering,
partially offset repurchases effected under theour share repurchase program.
Our
management’s discussion and analysis of our financial condition
and results of operations is based on our unaudited interim condensed
consolidated financial statements as of DecemberMarch 31, 2025,
2026, which have been prepared in accordance with U.S. generally accepted accounting
principles “U.S. GAAP”. The preparation of these unaudited interim condensed consolidated financial statements
requires our
management to make judgments and estimates that affect the reported amounts of assets, liabilities, costs and expenses, and
the disclosure
of contingent assets and liabilities during the reporting periods. We base our estimates on historical experience, known
trends and events,
and various other factors we believe are reasonable under the circumstances, the results of which form the basis for
making judgments
about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our
estimates and assumptions
on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.
We record accrued liabilities for estimated costs
of research and development activities conducted by third-party service providers, which include the conduct of preclinical studies and
clinical trials, and contract manufacturing activities. We record the estimated costs of research and development activities based upon
the estimated amount of services provided but not yet invoiced and includes these costs in trade and other payables on the consolidated
balance sheets and within research and development expenses on the consolidated statements of operations and comprehensive loss.
Benefit from R&D tax creditincentive consists of
the the
R&D tax creditincentive received in Australia, which is recorded within other income (expense), net. TheWe Company recognizesrecognize grants once both of
of the following conditions are met: (i) thewe Company isare able to comply with the relevant conditions of the grant and (ii) the grant is
received. receivable.
March 2026 Common Warrants
The March 2026 Common Warrants are recognized under ASC 815. The March 2026 Common Warrants failed to meet the equity scope exception in ASC 815-10-15-74(a) and thus are classified as a liability measured at fair value, subject to remeasurement at each reporting period. This conclusion is based on the fact that the March 2026 Common Warrants include certain cash-settlement features in the event of a tender offer, which is outside the control of the Company, and that the exercise price is denominated in a currency other than the reporting entity’s functional currency. As a result, the instrument is not considered to be indexed to the reporting entity’s own stock. We measured the March 2026 Common Warrants as a liability at fair value as at each reporting period with changes in fair value recognized as other (income) expense, net in the consolidated statements of operations and comprehensive income (loss).
The March 2026 Common Warrants was classified as a Level 3 financial instrument in the fair value hierarchy and was valued using the Black-Scholes option pricing model.
IXHL insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 0 filings. Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
No Form 4 stock transactions in this period.
Well-known investors holding IXHL (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Millennium Management (Israel Englander) | 2026-06-30 | 95,252 | $358.1K | 0.0% | New position |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 10,349 | $38.9K | 0.0% | New position |