The Incannex Healthcare Ltd (ASX: IHL) share price is having a tough time this morning. It sunk 7% from the open before recovering most of its losses and is now 0.71% in the red at 69.5 cents.
Investors are pushing Incannex shares lower after the company announced an acquisition deal.
Despite its shares taking a hit today, the medicinal cannabis company is still in the green across all major time frames, having climbed more than 235% in the past year.
What's impacting the Incannex share price?
The Incannex share price is slipping after the company advised it had executed a term sheet to wholly acquire APIRx Pharmaceutical USA, LLC on a proposed all-scrip transaction price of US$93.3 million.
Incannex says APIRx is "an innovative biotechnology company focused on research, development, and production of prescription pharmaceutical cannabinoid medicines".
It has 22 active clinical and preclinical research and development projects utilising its own proprietary technologies, the company added.
For Incannex, the acquisition is set to diversify its portfolio and give the company exposure to a wider array of markets, from pain to dementia to addiction disorders, just to name a few.
As a result, the company claims it now has an expanded total addressable market (TAM) of more than US$400 billion annually.
APIRx can also vote to have one board member designated to Incannex's board after the transaction is completed.
Speaking on the proposed acquisition that might be affecting the Incannex share price today, CEO Joel Latham said:
We believe that bringing together Incannex and APIRx will bolster our position as a leader in the medicinal cannabinoid sector and will further set IHL apart from other players in the industry.
With sizeable addressable markets and intellectual property spanning a multitude of unmet medical needs, we're positioning Incannex to be a significant player in the pharmaceutical sectors of the future. I'm excited by this acquisition opportunity on multiple fronts and look forward to working with the APIRx team to deliver on our vision of providing treatments which will make genuine differences to the lives of millions of people.
What's next?
All the necessary steps are underway to get the transaction underway, but shareholder approval is needed first.
The company will hold an extraordinary general meeting to discuss the transaction and attempt to garner shareholder support.
Incannex will update the market on when this meeting will take place. It also provided some high-level cost estimates.
"Incannex anticipates budgeting approximately A$5.0 million of expenditure on the APIRx product suite in the first 12 months," it said.
"However, the budget may be re-assessed to up to A$10 million following the conclusion, in April, of the Loyalty Option Offer, that could raise up to approximately A$28 million in development capital for the company."
The Incannex share price is up 19% in the past month of trade and has climbed 9% this year to date.
