Why has the Incannex share price rallied 20% in 2 weeks?

Could this be behind the medicinal cannabinoid pharmaceuticals producer's recent gains?

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Key points

  • The Incannex share price has lifted 21.4% over the last fortnight to trade at 34 cents today 
  • Its gain came amid the addition of the company to the ASX 300 
  • Its inclusion likely bolstered demand for its shares as funds tracking the index were forced to snap them up 

The Incannex Healthcare Ltd (ASX: IHL) share price has been on a roll lately.

It has rocketed 21.4% over the last fortnight despite no price-sensitive news having been released by the clinical stage developer of medicinal cannabinoid pharmaceuticals.

At the time of writing, the Incannex share price is trading at 34 cents, 1.49% higher than its previous close.

For context, the broader market is also in the green. The All Ordinaries Index (ASX: XAO) has lifted 1.1% right now.

So, what might be driving the ASX healthcare share higher lately? Let's take a look.

What's been going right for Incannex lately?

The Incannex share price has rallied in recent weeks as the company prepared to be included in the S&P/ASX 300 Index (ASX: XKO).

The healthcare stock was added to the index as part of its September rebalance alongside 15 other shares. Monday marked its first day on the ASX 300.

Its addition likely bolstered demand for its stock as funds tracking the ASX 300 were forced to buy in.

Its intended inclusion was announced on 2 September. The company's CEO Joel Latham responded to the news on 6 September, saying:

We're delighted to be recognised for inclusion in the ASX 300 index to be listed among the largest and most-recognisable companies in Australia.

Being listed in the index is a precursory investment condition for many domestic and international investment institutions so we are excited for the possibilities this recognition may bring.

Thus, its new home on the ASX 300 might explain some of the Incannex share price's recent gains.

Incannex is also likely in the front of investors' minds after the company released its annual report this morning.

The report details the company's financial year 2022, a year that Incannex chair Troy Valentine said brought "significant advancements in clinical development across [its] entire portfolio". Valentine continued:

Our strong financial position and having strong investor visibility in Australia and the United States gives us the necessary comfort to conduct our research programs unimpeded and at pace as we focus on delivering our novel pharmaceutical products and therapies to patients in need.

Incannex currently boasts 28 projects for which proof of concept has been established.

Incannex share price snapshot

While the last fortnight has been good for the Incannex share price, its longer-term performance has been less positive.

The stock has slumped 48% since the start of 2022. Though, it's still 5% higher than it was this time last year.

For comparison, the ASX 300 has fallen 11% year to date and 6% over the last 12 months.

Motley Fool contributor Brooke Cooper has no position 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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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