Why Did Incannex Healthcare Plunge 28.03% Despite Positive Trial Results?

Incannex Healthcare's stock price plummeted by 28.03% in pre-market trading on August 1, 2025, marking a significant downturn for the healthcare company.

Incannex Healthcare's stock experienced a notable decline on July 30, 2025, despite the release of positive Phase 2 clinical trial results for IHL-42X, a novel oral therapy for obstructive sleep apnea (OSA). The trial demonstrated statistically significant reductions in the apnea-hypopnea index (AHI) by up to 83% in high-dose groups, showcasing robust efficacy and an excellent safety profile with no serious adverse events reported.

The RePOSA trial involved 121 patients with moderate to severe OSA, who were randomized to receive low-dose, high-dose, or placebo IHL-42X. Both dosing groups showed clinically meaningful improvements in sleep metrics, including reduced wake after sleep onset (WASO) and oxygen desaturation index (ODI). Patient-reported outcomes also improved across multiple measures, such as the Epworth Sleepiness Scale and Functional Outcomes of Sleep Questionnaire.

CEO Joel Latham highlighted the results as a “critical step forward” in validating IHL-42X’s potential as a best-in-class therapy for OSA, with no current approved oral treatments available. Incannex is preparing for an End-of-Phase 2 meeting with the FDA to discuss regulatory pathways for Phase 3 trials and plans to finalize its Clinical Study Report and advance commercial discussions.

Despite the strong trial data, the stock’s sharp decline suggests market skepticism about near-term execution risks, including capital needs and regulatory hurdles. The drug’s success hinges on maintaining safety in larger trials and securing partnerships for commercialization.