DALLAS, TX -- February 18, 2026 --Incannex Healthcare Inc. (NasdaqGM:IXHL): Stonegate Capital Partners updates their coverage on Incannex Healthcare Inc. (NasdaqGM: IXHL). Incannex continued to build the clinical and patient-reported evidence base for IHL-42X in obstructive sleep apnea (OSA), following full Phase 2 RePOSA data and exit-interview analyses. Both low and high-dose IHL-42X achieved statistically significant reductions in Apnea-Hypopnoea Index (AHI) versus placebo, with maximum AHI reductions of up to 83% in the high-dose arm. Exit interviews showed 57.6% of participants reported perceived improvement in their OSA, and most of those described the change as meaningful to daily life. IHL-42X was well tolerated across both dose cohorts, reinforcing its potential for broad use.
IHL-42X Next Steps: After two successful Phase 2 studies, management used 4Q25 to pivot IHL-42X from pure data generation toward regulatory and late-stage planning. The Company is preparing for formal FDA interactions to define the registrational path, including Phase 3 design, primary and secondary endpoints, and potential expedited-review options. We expect IXHL to update the market after FDA discussions conclude and the forward development strategy is finalized, positioning IHL-42X for late-stage trials in 2026. IHL-42X has received FDA Fast Track designation, recognizing the serious nature of OSA and the significant unmet need for an approved oral pharmacotherapy, given current reliance on device-based treatments with poor adherence.
Financing: IXHL exited 2Q26 with a strong balance sheet, reporting $68.9M in cash and equivalents. The Company generated $71.7M in proceeds from share issuances while maintaining disciplined use of its ATM facility. Incannex also strengthened its capital structure by eliminating all outstanding Series A warrants, removing legacy dilution overhang, and authorizing a $20M share repurchase program, under which 3.1M shares were repurchased during the period. Together, these actions reflect a well-capitalized position and proactive capital management strategy to support continued clinical advancement. We believe IXHL now has several years of cash runway with enough funding to support IHL-42X up to commercialization and potentially move PSX-001 through a potential phase 3.
PSX-001 and IHL-675A Update: In CY25, Incannex reported positive Phase 2 results for PSX-001 (Psi-GAD), establishing it as a second major value driver. The randomized, placebo-controlled study showed a statistically significant and clinically meaningful reduction in HAM-A scores, with 44.1% of patients achieving ≥50% response and 27% reaching remission. The Company is progressing PSX-001 into next-phase clinical and regulatory planning, including preparation for a registrational study and multi-jurisdiction development. Meanwhile, IHL-675A remains in Phase 2 development for rheumatoid arthritis and represents a complementary anti-inflammatory platform asset supporting long-term growth.
Valuation: We use a probability-adjusted Discounted Cash Flow Model when valuing IXHL. Our valuation model returns a valuation range of $1.90 to $2.24 with a midpoint of $2.06 based on a discount rate range of 11.25% to 13.75% and a current risk adjustment range of 13% to 18%. Further details on our model can be found on page 5 of this report. We note that this model is highly levered to the out years due to the long term nature of IXHL's industry, leading to the potential for dramatic re-ratings as new information becomes available.
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