Incannex's Oral Apnea Drug Cut Breathing Disruptions Up to 83% in Phase II

A Phase II trial of IHL-42X, an oral fixed-dose combination of acetazolamide and dronabinol, cut nighttime breathing disruptions by up to 83% in individual obstructive sleep apnea patients — and Incannex Healthcare, the 30-employee company behind it, is betting that an oral pill can succeed where CPAP machines fail.

The market gap is well documented. Studies published in 2010 and 2017 report that as many as half of patients prescribed continuous positive airway pressure (CPAP) reject the gold-standard therapy outright, and 12% to 25% of those who start it quit within three years. Obstructive sleep apnea affects more than one billion people globally, roughly 30 million of them American.

"The reason for such high non-compliance is that CPAP is uncomfortable and socially awkward," Joel Latham, Incannex's president and CEO, told GEN. No pharmaceutical treatment for the condition exists today. IHL-42X has Fast Track designation from the FDA, and Latham wants Incannex to be first to market with an oral option.

What did the Phase II data actually show?

In the Phase II RePOSA trial, IHL-42X significantly reduced the frequency of breathing disruptions during sleep compared with placebo. Individual reductions reached 83%. At the group level, 33.3% of patients on the low dose and 41.2% on the high dose achieved reductions exceeding 30%.

A follow-on dose-optimization study, DReAMzz, began dosing patients in August across 14 U.S. clinical sites. "We expect to have the data from that trial in the first half of 2027," Latham said. Those results are the company's next milestone.

How does the drug work?

"IHL-42X is an oral, fixed-dose combination of acetazolamide and dronabinol," Latham explained. Acetazolamide — a carbonic anhydrase inhibitor already approved for altitude sickness and glaucoma — induces metabolic acidosis, effectively signaling excess CO2 in the blood and prompting a breath. Dronabinol, a synthetic THC used to control nausea and stimulate appetite, simultaneously dilates the airways.

"By inducing the taking of a breath and dilating the airways simultaneously, we're able to reduce the number of apnea episodes that patients experience during the evening," he said. Pairing two approved drugs lowers risk, streamlines development and cuts costs.

What's in the rest of the pipeline?

Incannex's second asset, PSX-001, is a psilocybin-based therapy for generalized anxiety disorder, designed to pair with cognitive behavioral therapy. Phase II trials completed in 2025 showed a 50% reduction in anxiety in 44% of patients. Generalized anxiety disorder affects roughly 3% of the U.S. population, and medical literature cites non-compliance rates of 40% to 60% within six months for current first-line SSRIs and SNRIs.

"The current standard of care has an extremely high non-compliance rate," Latham said. "This is a market where we firmly believe we can make significant impacts for patients suffering from debilitating anxiety disorders."

The third program, IHL-675A for rheumatoid arthritis, sits on the back burner. "It's been de-risked, but we truly have our hands full with the two lead assets," Latham admitted. The candidate has completed what he calls a "plethora" of preclinical, Phase I and Phase II studies with pleasing data, but resources are concentrated elsewhere.

Incannex's stated mission, per Latham, is "targeting indications that have limited or no treatment options available."

Why move headquarters to Dubai?

Founded in Australia in 2014, Incannex listed on both the ASX and NASDAQ in 2016, then delisted from the ASX in 2023 to focus purely on the U.S. exchange — a move Latham said gave easier access to U.S. brokers and investors familiar with cannabinoid and psychedelic sectors.

The company recently moved its executive headquarters from Melbourne to Dubai, keeping offices in Melbourne, where the bulk of the research team works, and New York. "Abu Dhabi is quite a biotech hub," Latham said, citing fast regulatory approvals and government engagement. "We're working with sovereign funds and with the government in relation to potential grants," he added.

The funding picture is concrete: nearly $60 million raised in the past year, bringing the cash balance above $74 million. That provides, in Latham's words, "ample runway to see assets through to potential completion of Phase III."

He also flagged partnership activity around PSX-001: "Various potential collaboration discussions are underway, so we expect to be able to deliver a few key milestones and updates to the market in the coming months."

With DReAMzz results due in 2027 and late-stage ambitions funded, Incannex's next two years will test whether a repurposed two-drug pill can convert CPAP's compliance problem into a commercial opportunity.