Firsthand Findings: How Incannex Is Designing Trials That Support Regulatory Approval

By Joel Latham, President and CEO, Incannex Healthcare

For biotechnology companies developing novel therapies, clinical trial design is one of the most consequential decisions in the drug development process. The structure of a trial determines how effectively a company can evaluate a treatment’s safety and efficacy and generate the evidence needed to advance toward regulatory approval.

For sponsors, this means considering the potential commercial application of a therapy early in development. Patient selection, endpoint selection, dosing strategies, and operational requirements should all reflect the intended treatment population and how the product may eventually be used in clinical practice.

Establish Clear Development Objectives Early

Effective clinical trial design begins with a clear understanding of the unmet medical need a therapy is intended to address. Sponsors should evaluate where existing treatments fall short and determine what clinical evidence would be necessary to demonstrate meaningful improvement. A novel mechanism of action or formulation may offer scientific promise, but sponsors must also establish whether the treatment can deliver benefits that matter to patients and healthcare providers.

Obstructive sleep apnea (OSA) offers a relevant example. Continuous positive airway pressure (CPAP) therapy is an established treatment, but long-term adherence remains challenging for some patients. This creates an opportunity to investigate alternative approaches that could address the condition through a different treatment model. Defining these objectives early helps guide decisions around the target patient population, appropriate comparators, and clinical outcomes.

Select Endpoints That Demonstrate Meaningful Clinical Benefit

Endpoint selection is another critical consideration, particularly for therapies targeting complex or chronic conditions. Clinical trials must generate objective evidence of treatment efficacy, but sponsors should also consider how those results translate into meaningful improvements for patients. In OSA, the apnea-hypopnea index (AHI) is an established measure of disease severity and an important endpoint for evaluating treatment response. However, paired with changes in AHI, measures of daytime fatigue, sleep quality, treatment tolerability, and quality of life provide additional context when evaluating the potential value of a therapy.

In our Phase 2 RePOSA trial of IHL-42X, both dose groups showed statistically significant reductions in AHI compared with placebo, with individual reductions of up to 83% from baseline. IHL-42X is an investigational oral combination therapy containing dronabinol, a manufactured form of delta-9-tetrahydrocannabinol (THC), and acetazolamide designed to target underlying mechanisms of OSA. The two compounds act on complementary physiological processes, with dronabinol influencing upper airway function and respiratory regulation, while acetazolamide stimulates respiratory drive. No serious adverse events were reported during the 28-day treatment period, and treatment-emergent adverse events were infrequent and predominantly mild to moderate. The low-dose group also showed statistically significant improvements in patient-reported sleep-related impairment and fatigue. These findings show the value of evaluating objective clinical measures alongside patient experience. Although patient-reported outcomes cannot replace appropriately selected primary efficacy endpoints, they can help sponsors better understand the relevance of observed treatment effects.

Use Early-Stage Trials To Inform Dose Selection And Later Development

Efficient clinical development requires sponsors to use each phase of research to inform subsequent decisions. Early-stage trials should provide the information needed to refine dosing strategies, evaluate safety, and establish a stronger foundation for later-stage studies.

Dose selection is essential for combination therapies, where sponsors must evaluate how individual components contribute to the overall treatment effect and whether the selected regimen provides an appropriate balance of efficacy and tolerability. In our Phase 2 RePOSA trial, researchers evaluated two dose strengths of IHL-42X against placebo, generating safety and efficacy data that informed the decision to pursue further dose optimization through the DReAMzz study ahead of Phase 3 development. While both dose strengths demonstrated efficacy, differences between objective measures of sleep apnea severity and patient-reported outcomes highlighted opportunities to further refine the treatment regimen. As a result, the DReAMzz Phase 2 crossover study is evaluating alternative ratios of dronabinol and acetazolamide to better characterize treatment response and inform dose selection for Phase 3. This type of sequential development approach allows sponsors to incorporate earlier findings into subsequent trial designs. It can also help identify questions that should be resolved before committing the resources required for larger studies.

RePOSA gave us a strong basis for the next development decision. Both dose strengths demonstrated statistically significant improvements in AHI, and the low-dose group also delivered statistically significant benefits in patient-reported sleep-related impairment and fatigue. Combined with the favorable tolerability findings, these results strengthened our confidence in IHL-42X and showed an opportunity to get more from the combination. We chose to evaluate additional ratios of the two components before Phase 3, with the aim of selecting a regimen that brings together strong respiratory efficacy, meaningful daily benefit, and good tolerability.

Account For The Unique Requirements Of Novel Therapies

Clinical trial design must account for the specific characteristics of the therapy being evaluated. For sponsors developing novel treatments, this may require adapting established study protocols to address unique safety considerations, administration requirements, or challenges in measuring treatment response. In developing IHL-42X for OSA, we have had to consider how to evaluate a combination therapy in a condition traditionally treated with devices such as CPAP. The Phase 2 RePOSA trial evaluated two dose strengths of IHL-42X against placebo over a 28-day treatment period, enrolling patients who were noncompliant with, intolerant of, or had not previously used positive airway pressure therapy. The study incorporated objective measures of respiratory events alongside patient-reported outcomes, allowing us to evaluate treatment response across both physiological and patient-experienced measures. This approach helped establish a clinical evidence base for a potential pharmacological treatment option and informed the design of subsequent studies. Building on that evidence, DReAMzz expands the evaluation to nine dose combinations in a crossover study. This allows us to examine a broader range of dronabinol-to-acetazolamide ratios and compare responses across treatment periods within the same participant. The design gives us a more detailed view of the dose-response relationship to guide selection of the regimen for Phase 3.

Psychedelic-based therapies, for example, present complexities related to treatment administration, blinding, patient selection, and the potential influence of the treatment setting on clinical outcomes. Some psychedelic therapies involve controlled dosing sessions and may require additional supervision or psychological support. These requirements can introduce variability between clinical sites if protocols are not consistently implemented. For sponsors developing these therapies, standardization is essential. Clinical protocols should clearly define treatment administration procedures, patient screening requirements, and safety monitoring expectations.

Another important consideration is the durability of treatment response. For therapies intended to provide sustained benefits following limited dosing, follow-up periods must be sufficient to evaluate how long those effects persist and whether additional treatment may be necessary. As these therapies progress through development, sponsors will need to generate reproducible evidence while establishing treatment protocols that can potentially be implemented outside controlled research environments.

Integrate Regulatory And Operational Planning Into Trial Design

Regulatory planning should begin before clinical protocols are finalized. Decisions involving formulation, endpoint selection, safety monitoring, and manufacturing can have significant implications for the evidence required to support eventual approval. Early engagement with regulators can help sponsors clarify development expectations and identify potential gaps before they become more difficult or costly to address. Our experience with IHL-42X shows how positive clinical data can shape the regulatory strategy. Following RePOSA, discussions with the FDA and input from our Clinical Advisory Board informed the DReAMzz protocol, including its focus on physiological outcomes and patient-reported benefit. IHL-42X has also received FDA Fast Track designation, providing opportunities for more frequent engagement as development progresses.

Operational feasibility is equally important. A protocol may be scientifically sound but difficult to execute consistently across multiple clinical sites. Complex administration procedures, burdensome visit schedules, or extensive monitoring requirements can affect recruitment, retention, and the quality of the resulting data.

Sponsors should assess whether study procedures are practical for participating sites and manageable for patients. The intended commercial treatment model should also inform these discussions. If a therapy requires specialized administration, ongoing monitoring, or additional clinical support, sponsors should consider how those requirements could affect adoption in routine practice. For IHL-42X, we have moved that planning into execution: DReAMzz began patient dosing in August 2026, supported by a network of 14 U.S. trial sites. Having the drug supply, site approvals, and study infrastructure in place enabled us to move from the RePOSA findings into the next stage of clinical development.

Moving From Clinical Evidence To Commercial Potential

The path from promising research to an approved therapy depends on the quality of the evidence generated throughout development. Each clinical trial should address specific questions that inform the next stage of research and reduce uncertainty around the treatment’s potential.

Ultimately, clinical trial design should support decisions throughout the development process, from determining whether a therapy warrants further investigation to establishing the evidence needed for regulatory review. Our Phase 2 RePOSA trial helped establish the clinical rationale for advancing IHL-42X and provided data to inform subsequent development decisions. Following a review of the RePOSA findings and discussions with the FDA, we advanced the DReAMzz Phase 2 crossover study to further optimize the dosing profile of IHL-42X. The study, which began dosing patients in August 2026, was developed with input from our Clinical Advisory Board and incorporates FDA feedback.

By evaluating alternative ratios of dronabinol and acetazolamide, DReAMzz is designed to generate the dose-selection data needed to inform the planned Phase 3 registration program. RePOSA demonstrated the potential of IHL-42X through improvements in breathing during sleep, patient-reported benefits, and favorable tolerability. DReAMzz builds on those findings to optimize the regimen and strengthen the evidence package for Phase 3. For us, thoughtful trial design means using positive results to make better development decisions and advance a potential oral treatment for patients who need additional options for managing OSA.

About The Author:

Joel Latham has served as the chief executive officer, president, and director of Incannex Healthcare since July 2023. He brings more than 20 years of senior management and operations experience in both public and private sectors. Previously, he was the CEO and managing director of Incannex Australia, where he played a key role in the company’s growth and its successful transition to Nasdaq. Latham has also held senior leadership roles in corporate strategy and global market development at Mars Foods, Tabcorp, and Philip Morris International.