Why did the Incannex share price go up in smoke in October?

The Incannex share price added to its recent suffering last month.

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Key points

  • The Incannex share price dumped 9% over the course of October, closing the month at 25 cents
  • That's despite seemingly good news of its two drugs, IHL-216A and IHL-675A
  • The ASX 300 company also posted its quarterly report last month

The Incannex Healthcare Ltd (ASX: IHL) share price went up in smoke in October, underperforming the S&P/ASX 300 Index (ASX: XKO) by 15% over the course of the month.

That was despite plenty of seemingly positive news being released by the healthcare stock.

The company works to develop medicinal cannabinoid pharmaceutical products.

 After closing September at 27.5 cents, the Incannex share price closed October at its lowest point of the month ­– 25 cents – marking a 9.1% fall. Meanwhile, the ASX 300 lifted 5.9%.

 So, what went wrong for the cannabinoid favourite? Let's take a look.

What went wrong for Incannex stock in October?

The Incannex share price stumbled through October despite three seemingly positive announcements being released by the ASX 300 newbie in that time.

The first detailed a meeting with the United States' Food and Drug Administration (FDA) regarding its drug IHL-216A.

Incannex chief scientific officer Dr Mark Bleackley commented on the regulator's feedback, saying:

The FDA … indicated that the agency is highly interested in the development of IHL-216A for treatment of traumatic brain injury … The FDA has provided essential advice on inhaled drug development that will guide the most efficient development of IHL-216A.

Sadly, the news appeared to disappoint the market. It bid the Incannex share price 8.6% lower on the release. Fortunately, the next announcement from the company inspired its stock to lift by 3.5%.

Days later, Incannex declared dosing in a phase one clinical trial assessing another drug – IHL-675A – was completed successfully. It will now get started on phase two trials of the drug.

But such gains weren't to last. The Incannex share price handed back 3.8% on the release of the company's quarterly report.

It posted a $4 million cash outflow for the three months ended 30 September, $2.26 million of which was related to research and development.

It closed the period with $33.4 million of cash in the bank – enough to fund an estimated eight future quarters.

Incannex share price snapshot

The Incannex share price has struggled this year after posting a near-300% gain in 2021.

As of this morning, it has fallen 61% since the start of 2022. It's also currently 43% lower than it was this time last year.

For comparison, the ASX 300 has fallen 8% 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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