Incannex secures $10M to fast-track sleep apnea drug after FDA boost

Incannex Healthcare has secured $10 million in fresh funding to push forward its sleep apnea treatment. The company's lead drug, IHL-42X, recently earned Fast Track status from the FDA, speeding up its path to market. This comes after promising results from earlier trials showed major improvements in patients with obstructive sleep apnea.

The new funds will mainly back an upcoming Phase 2 trial, DReAMzz, aimed at fine-tuning the drug's dosage before a planned Phase 3 study in late 2027.

The company raised the $10 million by issuing two million units at $5.00 each. Every unit includes one share and a warrant to buy another at $6.50, with the option open until March 2031. Incannex also cancelled its existing at-the-market equity program to strengthen its financial position.

Earlier data from the RePOSA study highlighted IHL-42X's potential. In that trial, 58% of participants saw a significant drop in their Apnea-Hypopnea Index (AHI), a key measure of sleep apnea severity. Those on the highest doses achieved reductions of up to 83%, with no serious side effects reported. The FDA's Fast Track designation now allows Incannex to use the 505(b)(2) regulatory pathway, which could shorten the approval process.

Incannex's stock has seen volatility in recent months. After a 1-for-30 reverse split in late February 2026 to meet Nasdaq's minimum price rule, shares climbed to $5.97 before dropping 35% to $3.8950 in March. By Saturday, the stock settled at around $3.27, giving the company a market value of approximately $38.1 million. The reverse split followed a low of $0.482 in October 2025, when the stock traded between $2.4 and $49.8 over the previous year.

The $10 million funding will help advance the DReAMzz trial, with results guiding the start of Phase 3 testing in the second half of 2027. The FDA's Fast Track designation and earlier trial success position IHL-42X as a strong candidate for treating obstructive sleep apnea. Incannex continues to build its financial and clinical strategy to bring the drug closer to approval.