The Incannex Healthcare Ltd (ASX: IHL) share price is gaining ground in early trade today and is currently changing hands at 37.5 cents apiece.
At one point today, shares in the medicinal cannabis company were trading 6% higher on the previous close at 38 cents before taking a small step down.
Incannex shares are on the move after the company announced a key update regarding a manufacturing contract for its IHL-42X drug candidate.
Here's what we know from the company this morning.
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Incannex share price spikes on manufacturing contract
Incannex advised it has engaged drug manufacturer Procaps Laboratories S.A. to "develop and manufacture IHL-42X soft gel capsules".
According to Incannex, Procaps has global expertise in drug development, having assisted in over 500 formulations for both nutritional and pharmaceutical products in more than 50 markets globally.
Meanwhile, the IHL-42X candidate its Incannex's proprietary cannabinoid formulation to treat obstructive sleep apnoea (OSA).
OSA is an often overlooked condition that has significant implications on cardiovascular, mental, and physical wellbeing. It's hoped Incannex's drug candidate can provide a remedial breakthrough in this field.
The agreement between Incannex and Procaps is effective immediately and will involve the manufacture of pharmaceutical grade soft gel capsules to be sent off and "used in pivotal phase 2, phase 3 and open label clinical trials".
Procaps will supply the capsules as long as they are required for clinical trial purposes.
On Procaps' end, it requires "twelve-month non-binding forecasts with four-month firm orders" for its own planning. At the same time, manufacturing costs are expected to be non-meaningful to Incannex's bottom line.
The announcement builds on previous regulatory tailwinds that have established credibility in Incannex's products and novel treatment alternatives in 2021.
The company also filed for patent protection over IHL-42X in several jurisdictions this year which, if successful, is sure to beef up its product portfolio.
Investors like the news today and are bidding the Incannex share price higher in early trade, on about half the volume of its 4-week average.
Shareholders will welcome any gains. They are 6% in the red over the last month after a period of volatility in their Incannex holdings.
Incannex share price snapshot
The Incannex share price has climbed 142% this year to date, less than half of its 12-month return of 346%.
Both of these results are well ahead of the S&P/ASX 200 Index (ASX: XJO)'s return of about 19% in that time.
