If my interpretation of the results is appropriate, IHL-42x has overwhelmingly surpassed expectations, and rather than just providing the first pharmaceutical therapy for mild to moderate Obstructive Sleep Apnea, it is presenting itself as a therapy suitable for the alleviation of even severe OSA for some people. There is the real potential for this drug to take the almost the entire CPAP market, allowing of course for a small minority of people who will either not fare well with drug, or might prefer CPAP for some other reason personal to them.
Here's a projection based on a number of assumptions, just as an interesting glimpse of a future, the potential of which has now become quite real.
Approval and commercialisation
I would put the odds of successful phase 3 trials at roughly 85%-90% considering this is not a cancer therapy, and the two active ingredients of IHL-42x are very well understood. The pathways they act upon to bring about a reduction in apnea events are fairly well understood. With careful trial design, we should be quite confident of a positive outcome.
Shares on issue
For the sake of this projection, I have frozen the number of shares on issue at the current amount. This is almost certainly not going to be the case, but the actual number of shares on issue in the future is unknowable, AND the upcoming options offer for existing share holders will go some way towards alleviating any dilution for shareholders who avail themselves of the offer.
CPAP market
This projection is based on the future growth of the CPAP device market, and a gradual encroachment on that market by IHL-42x. The projection assumes that alongside the existing CPAP device market, is an equally large market of patients who should be using CPAP but have rejected its use. The projection assumes a faster uptake from CPAP users, since non-users may have given up on treating their OSA to some degree, and don’t have the motivation of ridding themselves of the face mask.
The projection wrongly assumes that the economics of the CPAP market and those of IHL-42x’s pharmaceutical solution, will be directly comparable, with every one dollar no longer spent on a CPAP device equating to one dollar spent on purchasing IHL-42x. This is only acceptable for the purpose of this very rough estimation.
Market size and CAGR are taken from here.
https://www.bccresearch.com/market-research/medical-devices-and-surgical/continuous-positive-airway-pressure-devices-market.html#:~:text=The%20global%20market%20for%20CPAP,the%20period%20of%202019%2D2024.
Undiagnosed OSA
This projection tries to acknowledge that the vast pool of undiagnosed OSA sufferers will become more likely to be diagnosed once an effective pharmaceutical therapy is available. This factor is expressed as a percentage of the CPAP market. It is a flawed instrument, but at least gives some representation to this factor.
Timeline, Share Price
Assuming commercialisation in 2025, and a scenario in which Incannex remains the sole exploiter of the IP. This may be an unlikely scenario but it still can go some distance towards understanding the value of theIHL-42x IP that Incannex might sell or license.
A Price to Sales ratio of 5:1 is used.
Naturally, the market cap estimates and share price estimates are based on IHL-42x alone, and do not take into account any of Incannex’s other drug candidates.
Conclusion
Flawed and incomplete as it is, this estimate allows us to realise that this drug candidate alone is shaping up to be a colossal earner for whoever decides to back its progress towards commercialisation, including us shareholders, of course. We already knew this, but with results outstripping anything I personally had allowed myself to hope for, my previous projections needed an update.
I expect the share price to rise in jumps and dawdles towards $2.30 as the market absorbs the opportunity and odds at play here. It might take us a while to get there. In the more immediate interim, my next milestone SP is $1.29. Those who catch on sooner will make an easy buck-fitee.
Research your own doodoo, and this is not sanitary advice.
Good luck long term holders: remember to sleep more soundly from now on. MAJOR de-risking event.
