Incannex Healthcare Inc. has started screening potential participants in the DReAMzz Phase 2 study of IHL-42X, its investigational once-daily oral treatment for obstructive sleep apnea. The first approved clinical sites are identifying and assessing patients, marking the transition from trial preparation into active recruitment for a study intended to select the most appropriate dose combination before a planned Phase 3 program. IHL-42X has received Fast Track designation from the United States Food and Drug Administration, but participant screening does not mean patients have been enrolled or dosed, and the July 23 announcement did not include new efficacy or safety results.
IHL-42X combines dronabinol and acetazolamide, two existing active ingredients that Incannex Healthcare believes can address different biological contributors to obstructive sleep apnea. The company is using DReAMzz to test alternative ratios of the two ingredients after earlier Phase 2 data showed statistically significant reductions in the apnea-hypopnea index compared with placebo.
Why Incannex Healthcare added DReAMzz before advancing IHL-42X into Phase 3 development
DReAMzz is not simply a repeat of the completed RePOSA Phase 2 study. Incannex Healthcare introduced the study after reviewing the RePOSA findings and discussing the development pathway with the United States Food and Drug Administration. The company concluded that additional dose optimization could strengthen the design of the eventual Phase 3 program by identifying the combination of dronabinol and acetazolamide that offers the most favorable balance of efficacy and tolerability.
The randomized, double-blind Phase 2 study is expected to enroll approximately 120 adults with obstructive sleep apnea who are unable or unwilling to use positive airway pressure therapy consistently. DReAMzz consists of three separate four-way crossover studies, with each comparing three IHL-42X dose combinations against placebo. Nine combinations will be tested across the program, using dronabinol doses ranging from 2.5 milligrams to 7.5 milligrams and acetazolamide doses ranging from 125 milligrams to 375 milligrams.
Each treatment period is planned to last 28 days. The primary endpoint will evaluate change in the apnea-hypopnea index, a measure of how frequently breathing stops or becomes partially obstructed during sleep. Because participants receive multiple treatments in a crossover sequence, the design allows investigators to compare responses within the same individuals while evaluating several dose ratios without running nine entirely separate parallel studies.
Incannex Healthcare said the first group of clinical sites has received approval to begin screening, with additional sites expected to follow as local requirements are completed. The company has appointed a global contract research organization, manufactured study drug, secured import and export permits and established the distribution infrastructure needed to support the trial. Potential participants will be identified through clinical-site databases and public outreach before undergoing the study’s eligibility assessments.
Those operational steps matter, but screening remains an early recruitment milestone. The more consequential developments will be the enrollment and dosing of the first participants, recruitment rates across the 14 identified locations, completion of the crossover treatment periods and disclosure of the selected Phase 3 dose.
What the earlier RePOSA results actually showed about IHL-42X efficacy and tolerability
The rationale for DReAMzz rests on the RePOSA Phase 2 trial, which enrolled 121 adults with moderate-to-severe obstructive sleep apnea. Participants received a high dose of IHL-42X, a low dose or placebo for 28 days. Incannex Healthcare reported that both active-dose groups produced statistically significant improvements in percentage change from baseline in the apnea-hypopnea index compared with placebo.
The frequently cited reduction of up to 83% refers to the maximum reduction observed in an individual participant in the high-dose group. It does not mean that the average patient experienced an 83% improvement. The maximum individual reduction reached 79% in the low-dose group. Approximately 41.2% of high-dose patients and 33.3% of low-dose patients achieved reductions greater than 30%, while 14.7% and 13.9%, respectively, achieved reductions exceeding 50%.
That distinction is important because maximum responses can show what may be biologically possible in selected patients, but regulators and clinicians will focus on average treatment effects, consistency across the study population, clinically meaningful responder rates and the comparison with placebo.
The company also reported statistically significant improvements in oxygen desaturation measures and selected patient-reported outcomes, including fatigue and sleep-related impairment. No serious adverse events were reported during the 28-day treatment period, and most treatment-emergent adverse events were described as mild or moderate. However, the study’s relatively short duration limits what can be concluded about tolerability during chronic treatment.
DReAMzz is designed to investigate whether changing the ratio of the two active ingredients can produce a more reliable response across a broader proportion of patients. A dose that delivers a slightly lower maximum effect but produces more consistent efficacy with fewer adverse events could ultimately offer a stronger Phase 3 and commercial profile than the dose associated with the most dramatic individual response.
Could an oral IHL-42X treatment address limitations of current sleep apnea therapies?
Obstructive sleep apnea occurs when the upper airway repeatedly narrows or collapses during sleep, disrupting breathing and reducing oxygen levels. Positive airway pressure devices remain an important treatment, but some patients struggle with mask discomfort, noise, dryness or the long-term discipline required to use the equipment every night.
IHL-42X is intended for patients who are intolerant of, noncompliant with or unwilling to use positive airway pressure therapy. Dronabinol is a synthetic form of delta-9-tetrahydrocannabinol, while acetazolamide is a carbonic anhydrase inhibitor. Incannex Healthcare believes dronabinol can influence airway and respiratory control through cannabinoid receptors, while acetazolamide can stimulate breathing by producing a mild metabolic change that affects the body’s response to carbon dioxide.
The components are already used separately for other approved indications, which could support a regulatory strategy under the United States Food and Drug Administration’s 505(b)(2) pathway. A completed pharmacokinetic study compared IHL-42X with reference versions of dronabinol and acetazolamide, potentially allowing Incannex Healthcare to rely partly on existing safety and toxicology information. The company has not established that the product qualifies for approval through that pathway, and regulators may still require substantial additional evidence for the new combination and sleep apnea indication.
The use of dronabinol also creates development and commercialization considerations that extend beyond efficacy. Dronabinol capsules are classified as Schedule III controlled substances in the United States because the ingredient has psychoactive and abuse potential. Incannex Healthcare will need to show that the selected dose is appropriate for nightly use and does not create unacceptable cognitive, psychiatric, driving or dependence-related risks.
The competitive claim that no oral pharmaceutical therapy is approved specifically for obstructive sleep apnea remains relevant, but the wider treatment landscape is changing. Eli Lilly and Company’s injectable Zepbound, or tirzepatide, is approved to improve moderate-to-severe obstructive sleep apnea in adults with obesity when used alongside diet and physical activity. IHL-42X is being developed as an oral therapy that is not limited in its stated development program to patients with obesity, potentially giving it a different clinical position if efficacy and safety are confirmed.
An oral option could expand treatment choices for patients unable to tolerate devices, but convenience alone will not ensure adoption. Physicians will need evidence that IHL-42X delivers durable reductions in breathing events, improves daytime functioning and can be used safely over substantially longer periods than the completed 28-day RePOSA treatment phase.
Why DReAMzz screening is meaningful but does not yet remove the major IHL-42X risks
The commencement of screening shows that Incannex Healthcare has moved beyond protocol planning and trial setup. It also provides a clearer bridge between the company’s first positive Phase 2 results and the planned pivotal program. Successful dose selection could prevent Incannex Healthcare from entering Phase 3 with a formulation that produces avoidable adverse events or inconsistent efficacy.
The study could also sharpen the commercial narrative around IHL-42X by pairing objective sleep measurements with patient-reported outcomes involving fatigue, sleep impairment and daily functioning. Those measures may help demonstrate whether reductions in apnea events produce benefits that patients notice outside the sleep laboratory.
Incannex Healthcare shares were trading near $3.16 on July 23, up approximately 1.3%, with a market capitalization of roughly $39 million. The restrained stock response is consistent with the limited scope of the milestone because screening does not generate clinical data and does not guarantee that recruitment or dosing will proceed on schedule.
The company reported $68.9 million in cash and cash equivalents as of December 31, 2025, after raising substantial capital through share issuances during the preceding six months. It also completed a one-for-30 reverse stock split in February 2026, making direct comparisons with older per-share prices potentially misleading. Incannex Healthcare has acknowledged that continued financing, Nasdaq listing compliance and successful trial execution remain material risks.
The next meaningful clinical milestones will be the first participant enrolled and dosed, progress toward the planned 120-patient target, confirmation of the selected IHL-42X dose and guidance on the design and timing of Phase 3. Until then, DReAMzz represents a necessary development step rather than evidence that the efficacy reported in RePOSA has been reproduced.
