The Incannex Healthcare Ltd (ASX: IHL) share price is wobbling today following a company announcement regarding loyalty options.
In the first hour of morning trade, the medicinal cannabis company's shares were trading as low as 60 cents — a fall of almost 10%.
They then bounced back into the green at 68 cents before falling into the red again. At the time of writing, they are swapping hands for 65.5 cents, down 1.5% on yesterday's closing price.
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Incannex set to issue loyalty options
A possible catalyst for the movement in the Incannex share price could be the fear of an impending share dilution.
According to its release, Incannex intends to undertake a loyalty issue of options to all eligible shareholders.
The options will be distributed for nil consideration at a ratio of one free loyalty option for every 15 shares held.
The loyalty options will have an exercise price of 35 cents each. Shareholders will have until Friday, April 22 to take up the offer. If exercised, each loyalty option will result in the allotment and issue of one fully paid ordinary Incannex share.
Furthermore, each loyalty option exercised will also result in the issue of a second 'piggy-back option'.
This will be issued for nil consideration at a ratio of one for every two loyalty options exercised by the expiry date.
The piggy-back options will have an exercise price of $1.00, expiring 28 April, 2023.
Incannex highlighted the loyalty option and piggy-back options are intended to "reward loyal shareholders who have supported Incannex". This particularity relates to the recent clinical trial success with IHL-42X for obstructive sleep apnoea.
Investors will have until 23 March (record date) to buy the company's shares to be involved with the latest offer.
Incannex CEO and managing director Joel Latham commented:
Incannex has a remarkable base of shareholders who understand our company, our clinical programs and high ambitions.
The loyalty option is intended to reward our loyal shareholders whilst simultaneously assisting Incannex with the funding requirement for the next phase of development.
Our research is highly focused on completing the clinical trials necessary to commercialise our sophisticated cannabinoid and psychedelic medicines developed for prescription, or administration, by health professionals.
Incannex share price snapshot
Over the past 12 months, the Incannex share price has surged close to 230%, while it is up 8% this year to date.
The company's shares reached a multi-year high of 75.5 cents earlier this month, before moving in circles.
On valuation grounds, Incannex has a market capitalisation of around $804.9 million.
