Australia’s Incannex Healthcare Inc (NASDAQ: IXHL) finalized a US$60 million dollar financing deal with New York’s investment firm Arena Investors, LP this week.
The deal will see that Incannex obtains a US$50 million line of credit from Arena while providing the firm with secured convertible notes valued at US$10 million as part of the debt arrangement. Funds will be used for clinical studies and other expenses.
“We are pleased to be partnering with Arena on this strategic financing, which strengthens Incannex’s ability to advance our lead programs through key late-stage clinical milestones,” chief executive Joel Latham said in a news release.
Upon closing of the deal at an unspecified date, Incannex will receive an initial tranche of US$3.33 million from Arena in exchange for the convertible notes. These can then be converted into stock by Arena when certain conditions have been met for an equity stake in Incannex.
Two additional tranches valued at up to US$6.67 million will become accessible for the biopharmaceutical company at a later date. Incannex currently has three clinical trials underway on psychedelic and cannabinoid drugs used to treat arthritis, sleep apnea and anxiety.
Read more: Incannex and partner Clarion open Australia’s first psychedelic therapy clinic in Melbourne
Read more: Incannex Healthcare receives approval for proprietary drug for treating obstructive sleep apnea
Majority of psychedelic-keen investors plan to up their stake
According to a recent study completed by Quantum Research Group LLC on behalf of Incannex, 66 per cent of stock investors who are interested in psychedelics plan to buy up more shares over the next year.
However, only 6 per cent of the 541 study participants currently hold shares in companies that are active in the sector. About 73 per cent of them expect public operators involved with psychedelic drug development to grow while 70 per cent think that high returns are on the horizon in the future.
Fifty-five per cent are attracted to psychedelic stocks because they believe that the industry has major implications for the advancement of mental health treatments.
“The discrepancy between interest and investment levels suggests a market on the cusp of significant growth,” Quantum said in the report.
Data Bridge Market Research has predicted that the sector will be worth approximately US$4.5 billion more than it is now by 2031. Meanwhile, others like Grandview Research and Mordor Intelligence have made similar predictions.
Grandview expects a 12.1 per cent compound annual growth rate for the sector between now and 2031. Mordor estimates that the market will be worth US$6.8 billion by 2029. Based on several current estimates, the market for psychedelic drugs is now worth between US$2.7 billion and US$3.5 billion.
“As the industry continues to mature and more information becomes available, those who choose to invest early might find themselves well-positioned to benefit from this promising sector,” Quantum explained.
rowan@mugglehead.com
