Incannex gets Nasdaq deficiency notice on $50.0 million market value requirement

Incannex Healthcare Inc. (Nasdaq: IXHL) received a deficiency notice from The Nasdaq Stock Market LLC on January 3, 2025. The notice said the market value of its listed securities had fallen below the $50.0 million minimum required for continued listing on the Nasdaq Global Market. The company reported the notice in a Form 8-K filed January 10, 2025 under Item 3.01, which covers notices of a failure to meet a continued listing rule. The notice does not affect the listing or trading of the stock for now. Joel Latham, Chief Executive Officer and President, signed the report.

The rule and the deadline

The 8-K says Incannex is not in compliance with Nasdaq Listing Rule 5450(b)(2)(A), which requires a minimum market value of listed securities (MVLS) of at least $50.0 million. The notice gives the company 180 calendar days, until July 2, 2025, to regain compliance. To do so, the MVLS must meet or exceed $50.0 million for at least ten consecutive business days within that period.

The company has a second route. It may apply and pay the related fee to transfer its listing to The Nasdaq Capital Market, provided it then meets that market's continued listing requirements. The 8-K says the company intends to monitor its MVLS and consider its options, including a transfer to the Capital Market. It also says it does not anticipate that such a transfer would materially affect its prospects.

The 8-K's forward-looking statements section says there can be no assurance the company will regain compliance during any compliance period. It names the risk that Incannex may not meet Nasdaq standards for the Global Market or the Capital Market and so could be delisted, and the risk that Nasdaq may not grant relief from delisting.

The company's own numbers

Incannex's annual report on Form 10-K covers the fiscal year ended June 30, 2024. The company describes itself as a clinical-stage biopharmaceutical company developing medicines for serious chronic diseases, and its lead candidates are in Phase 2/3 and Phase 2 development.

The report says management has identified conditions and events that raise substantial doubt about the company's ability to continue as a going concern. As of June 30, 2024, the company had cash and cash equivalents of $5.6 million, a decrease of $16.5 million from June 30, 2023. The net loss was $18,459 thousand for fiscal 2024, against $48,811 thousand for fiscal 2023. The accumulated deficit reached $110,671 thousand at June 30, 2024.

The report describes IHL-42X, a drug candidate in a pivotal Phase 2/3 trial for obstructive sleep apnea. The company said it expected top-line data from the Phase 2 portion of that trial in the first half of 2025. Its PSX-001 candidate, an oral synthetic psilocybin treatment, is in Phase 2b development for generalized anxiety disorder, and the report says the FDA has allowed that trial to proceed. IHL-675A, a combination of cannabidiol and hydroxychloroquine sulfate, is in a Phase 2 trial in rheumatoid arthritis, with top-line data expected in the second half of 2025.

What the notice leaves open

The notice is a market value test, not a finding about the science. Even so, the company has several early-stage programs that depend on new financing. Its cash balance at June 30, 2024 was $5.6 million against a fiscal 2024 net loss of $18,459 thousand, and the 10-K's going-concern language sits in the same filings as the notice.

The 8-K gives no market value figures, so it does not show how far the stock is from the $50.0 million threshold. Nor does it say whether the company plans to raise money or change its share structure to meet the test.

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