Incannex Healthcare Limited (IHL), a clinical-stage pharmaceutical company developing medicinal cannabis pharmaceutical products and psychedelic medicine therapies for unmet medical needs including a drug candidate for obstructive sleep apnea, has executed a term sheet with binding commercial terms to wholly acquire APIRx Pharmaceutical USA LLC. It is subject to shareholder approval.

APIRx is a biotechnology company focused on research, development, and production of prescription pharmaceutical cannabinoid medicines. It has 22 active clinical and pre-clinical research and development projects utilizing proprietary technologies. The acquisition of APIRx brings to Incannex a diverse portfolio of therapeutic candidates targeted at treating a range of conditions including restless leg syndrome, pain, dementia, Parkinson’s disease, gastrointestinal diseases, periodontitis, addiction disorders, skin conditions, and ophthalmic conditions.

APIRx was established as a corporate entity in the Netherlands to amalgamate the intellectual property assets of George Anastassov, MD, DDS, MBA, and Lekhram Changoer, who are APIRx co-founders. Anastassov and Changoer have collaborated since 2003 to develop a patent portfolio pertaining to pharmaceutical cannabinoid inventions. They previously licensed their technology to AXIM Biotechnologies Inc, where they were part of the lead management team, overseeing a peak market capitalization of approximately US$1.2B in 2017 prior to the assets being privatized by APIRx.

Numerous pre-clinical studies and clinical trials over the APIRx therapeutic candidates have been undertaken to justify the intellectual property portfolio, which includes 19 granted patents and 23 pending patents. Key patents relate to sustained oral mucosal delivery of cannabinoids and cannabinoid combinations through chewing gum, oral care cannabinoid compositions, cannabinoid ophthalmic solutions, topical compositions containing cannabinoids and cannabinoid extraction technologies.

The company’s MedChew RL, in development for restless legs syndrome, is in the pre-clinical stage.

Strategic Rationale

The acquisition of APIRx will significantly strengthen Incannex’s position with regard to cannabinoid and psychedelic treatment development. 

It will:

  • Add a large portfolio of intellectual property with granted and pending patents
  • Expand Incannex’s addressable markets globally and addressable market sizes by over US$400bn per annum
  • Further enhance Incannex’s technical and drug development capability by adding scientists to the Incannex team.
  • Expand the company’s drug delivery capability to include APIRx’s patented delivery technologies.

APIRx will be entitled to nominate one board member to Incannex after completion of the proposed transaction.

Joel Latham, CEO and managing director of Incannex, says in a release, “We believe that bringing together Incannex and APIRx will bolster our position as a leader in the medicinal cannabinoid sector and will further set IHL apart from other players in the industry. With sizable addressable markets and intellectual property spanning a multitude of unmet medical needs, we’re positioning Incannex to be a significant player in the pharmaceutical sectors of the future. I’m excited by this acquisition opportunity on multiple fronts and look forward to working with the APIRx team to deliver on our vision of providing treatments which will make genuine differences to the lives of millions of people”.

APIRx co-founder Anastassov says in a release,”We are delighted to partner with the IHL team as we believe that our extensive experience and broad IP asset base is perfectly positioned for further development and expansion within the IHL organization. Both companies have proven track records to deliver innovative projects and the goal of this transaction to create the global leader in the cannabinoid, psychedelic, and combination pharmaceuticals space. We intend to do this by innovatively addressing conditions for which there are only modest, or no safe and effective, treatment options”.

APIRx co-founder Changoer says in a release, “APIRx is bringing new drug delivery technologies backed by patents that, when combined with Incannex’s existing intellectual property, will result in IHL being a state-of-the-art, industry-leading cannabinoid and psychedelic platform. The drug products developed utilizing this broader portfolio of technologies gives us the opportunity to develop, in the clinic, a diverse range of innovative products addressing significant unmet medical needs. A post-acquisition Incannex will also have greater presence in the United States and Europe, which may benefit the company to more efficiently undertake multi-site clinical trials that will ultimately be required for FDA clinical trial programs aimed at drug approval.”

Next Steps

Incannex has commenced the documentation of the long form contract required to complete the proposed transaction. Shareholder approval will be sought by means of an extraordinary general meeting of shareholders. In anticipation of the completion of the transaction, the Incannex medical and scientific team continue thorough assessment of the APIRx projects to best prioritize the development of the APIRx therapeutic candidates. Incannex anticipates budgeting approximately A$5.0M of expenditure on the APIRx product suite in the first 12 months. However, the budget may be re-assessed to up to A$10M following the conclusion, in April, of the Loyalty Option Offer, that could raise up to approximately A$28M in development capital for the Company.

The proposed acquisition transaction is not a related party transaction.

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