Incannex (ASX:IHL) share price leaps 6% on manufacturing update

Sprouts of green appear for Incannex shares this morning after a market update.

| More on:
a woman holds a newly-sprouted cannabis plant in a ball of soil as she walks along a path in a farm where crops are growing either side.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Incannex Healthcare Ltd (ASX: IHL) share price is gaining ground in early trade today and is currently changing hands at 37.5 cents apiece.

At one point today, shares in the medicinal cannabis company were trading 6% higher on the previous close at 38 cents before taking a small step down.

Incannex shares are on the move after the company announced a key update regarding a manufacturing contract for its IHL-42X drug candidate.

Here's what we know from the company this morning.

Incannex share price spikes on manufacturing contract

Incannex advised it has engaged drug manufacturer Procaps Laboratories S.A. to "develop and manufacture IHL-42X soft gel capsules".

According to Incannex, Procaps has global expertise in drug development, having assisted in over 500 formulations for both nutritional and pharmaceutical products in more than 50 markets globally.

Meanwhile, the IHL-42X candidate its Incannex's proprietary cannabinoid formulation to treat obstructive sleep apnoea (OSA).

OSA is an often overlooked condition that has significant implications on cardiovascular, mental, and physical wellbeing. It's hoped Incannex's drug candidate can provide a remedial breakthrough in this field.

The agreement between Incannex and Procaps is effective immediately and will involve the manufacture of pharmaceutical grade soft gel capsules to be sent off and "used in pivotal phase 2, phase 3 and open label clinical trials".

Procaps will supply the capsules as long as they are required for clinical trial purposes.

On Procaps' end, it requires "twelve-month non-binding forecasts with four-month firm orders" for its own planning. At the same time, manufacturing costs are expected to be non-meaningful to Incannex's bottom line.

The announcement builds on previous regulatory tailwinds that have established credibility in Incannex's products and novel treatment alternatives in 2021.

The company also filed for patent protection over IHL-42X in several jurisdictions this year which, if successful, is sure to beef up its product portfolio.

Investors like the news today and are bidding the Incannex share price higher in early trade, on about half the volume of its 4-week average.

Shareholders will welcome any gains. They are 6% in the red over the last month after a period of volatility in their Incannex holdings.

Incannex share price snapshot

The Incannex share price has climbed 142% this year to date, less than half of its 12-month return of 346%.

Both of these results are well ahead of the S&P/ASX 200 Index (ASX: XJO)'s return of about 19% in that time.

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Ramsay Health Care Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Gainers

Ten smiling business people wave to the camera after receiving some winning company news.
Share Gainers

Here are the top 10 ASX 200 shares today

The ASX 200 enjoyed a strong start to the trading week today.

Read more »

Smiling couple looking at a phone at a bargain opportunity.
Share Gainers

Why Gentrack, New Hope, Nuix, and Star Entertainment shares are charging higher

These shares are starting the week strongly. But why?

Read more »

Sports fans looking at smart phone representing surging pointsbet share price
Share Gainers

Guess which ASX All Ords share just rocketed 25% on an earnings upgrade

Investors are bidding up the ASX All Ords share following an improved FY 2024 earnings outlook.

Read more »

A woman's hand draws a stylised 'Top Ten' on a projected surface.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a sobering end to the week's trading this Friday.

Read more »

Man holding Australian dollar notes, symbolising dividends.
Share Gainers

How a $9k investment in this ASX All Ords stock ballooned to $35,234 in just 3 years!

Shares in the ASX All Ords stock have rocketed even as it’s paid out market-beating dividends.

Read more »

Two colleagues at work looking at a tablet and smiling at a rising share price.
Share Gainers

Why AIC Mines, Bendigo and Adelaide Bank, Patriot Battery Metals, and Vulcan Energy are racing higher today

These shares are ending the week in a positive fashion.

Read more »

Emotional euphoric young woman giving high five to male partner, celebrating family achievement, getting bank loan approval, or financial or investing success.
Share Gainers

Guess which ASX lithium share just leapt 13% on major financing news!

Investors are bidding up the ASX lithium share on the back of major financing news.

Read more »

A neon sign says 'Top Ten'.
Share Gainers

Here are the top 10 ASX 200 shares today

The ASX 200 was on fire today, with almost every sector surging.

Read more »