NASDAQ: IXHL

PSX-001, our drug candidate in Phase 2 clinical
development, is an oral synthetic psilocybin treatment, administered in combination with psychological therapy for patients with moderate-to-severe
generalized anxiety disorder (“GAD”). We completed a Phase 2 clinical trial, known as PsiGAD1, in the results of which we
observed that the combination of synthetic psilocybin with psychotherapy significantly reduced anxiety scores and was well-tolerated in
GAD patients. In this trial, statistically meaningful reductions in Hamilton Anxiety Rating Scores (“HAM-A scores”) were observed,
with subjects in the investigational arm achieving an average 12.8-point reduction from baseline that was sustained for an 11-week follow
up period. A greater than 50% reduction in HAM-A scores was observed in 44.1% of subjects receiving the experimental treatment and 24%
of subjects in the treatment arm achieved full disease remission, a number five times higher than placebo. Improvements were also observed
in secondary endpoint measures. PSX-001 was observed to be well-tolerated with no serious adverse events reported. The majority of TEAEs
were transient, mild to moderate in nature and consistent with the expected pharmacological effects of psilocybin. No signs of increased
suicidality, psychosis, or prolonged psychological distress, concerns often cited with psychedelic treatments, were observed. We have
a cleared Investigational New Drug (“IND”) application with the FDA and are preparing to initiate a multi-jurisdiction Phase
2 clinical trial in 2026.

IHL-675A is our drug candidate for the treatment
of inflammatory conditions, with an initial focus on rheumatoid arthritis. IHL-675A is an oral fixed-dose combination of cannabidiol (“CBD”)
and hydroxychloroquine sulfate designed to target two different pathways, acting synergistically to alleviate inflammation. In our Phase
1 clinical trial, IHL-675A was observed to be well-tolerated and bioavailable. In preclinical studies, IHL-675A was observed to reduce
inflammatory markers and disease scores across multiple animal inflammatory disease models and in vitro assays. This candidate was being
developed in an Australian Phase 2 trial investigating the safety and efficacy of IHL-675A in rheumatoid arthritis patients, but we encountered
patient recruitment challenges and this Phase 2 clinical trial was terminated. Insufficient data was collected to make any conclusions
on safety or efficacy of IHL-675A. We now are developing a strategy for an IND opening study investigating the safety and efficacy of
IHL-675A in patients diagnosed with rheumatoid arthritis to be conducted in the United States.

Each of these programs represents a potential new
approach to treating serious conditions that currently have limited, inadequate, or no approved pharmaceutical options.

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Our Strategy

Our mission is to advance novel therapies, leveraging
evidence-based innovation, with the potential to transform the lives of people suffering from serious, chronic conditions and unmet medical
needs. Our three lead programs were created internally and prioritized based on their potential to offer new therapeutic approaches and
long-term patient benefits.

We aim to maximize value to our stockholders and
to provide important new treatment options to patients in need of new therapeutic options. Key elements of our strategy include:

●Advance our novel investigational drug candidates through pivotal and registrational clinical development programs. We are
pursuing approval from the FDA through the submission of New Drug Applications (“NDAs”) for all our three lead drug candidates.
We plan to seek market authorization in the United States for our drug candidates and following U.S. approval, we plan to strategically
expand into the European Union, United Kingdom, Japan, Australia, and Canada. These regions represent significant opportunities due to
their large healthcare systems, established regulatory frameworks, and high market demand for innovative therapies. By securing approvals
in these key regions, we aim to maximize the global commercial potential of our drug candidates.

●Seek streamlined regulatory pathways for our drug candidates. We and our consultants and advisors believe that each of our lead
drug candidates may be eligible to qualify for one or more FDA expedited review programs (e.g. breakthrough therapy designation, accelerated
approval, priority review and/or Fast Track designation). Each of these programs target conditions that currently have limited, inadequate,
or no approved pharmaceutical treatment options. FDA expedited review programs may facilitate the development and potentially expedite
review of drugs to treat serious conditions and fill an unmet medical need. Where appropriate, we also intend to pursue the FDA’s
505(b)(2) pathway, enabling more efficient approval by leveraging existing data from approved products and established active ingredients.

●Maintain a strong intellectual property portfolio. We believe we have developed a global intellectual property strategy to
support our development and ultimate global commercial objectives. We are monitoring the results of our R&D programs to identify new
intellectual property and intend to pursue protection in the United States, Europe, Japan, Israel, and other key global markets.

●Maximize the value of our pipeline and drug candidates. We are actively pursuing FDA registration for our lead drug candidates
currently in development. Our approach focuses on advancing novel, scientifically validated therapies with strong clinical potential.
Simultaneously, we will retain the flexibility to explore strategic partnerships, licensing agreements, and collaboration opportunities
as they arise, with the objective of maximizing the value of our pipeline and approved drug candidates. These efforts are aligned with
our commitment to delivering long-term value for our stockholders.

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Lead Drug Candidates

The estimated addressable global market opportunity
for OSA medical devices is approximately US$8.2 billion, with an estimated compound annual growth rate (“CAGR”) of 7.33% from
2024 to 2029. Sales for GAD treatments in the United States reached approximately US$21 billion in 2023. The rheumatoid arthritis market
in the United States reached US$25.37 billion in 2023 and is expected to exceed US$31.58 billion by 2033. We believe our drug candidate,
IHL-675A, also has potential applications in other inflammatory conditions, such as inflammatory bowel disease, chronic obstructive pulmonary
disease (“COPD”), and asthma. Sales for these other inflammatory conditions in the United States totaled US$3.6 billion in
2022.

Clinical Approach

Through our internal research and collaborations with leading medical
institutions in Australia, we identified significant opportunities to pursue combination drug strategies targeting synthetic cannabinoids
and psychedelic agents to address unmet medical needs. Combination therapy allows for lower doses than monotherapy, which may reduce the
likelihood of unwanted side effects while enhancing efficacy.

●IHL-42X and IHL-675A: In these programs, we are developing oral fixed-dose combinations in which the active agents target different
components of disease pathophysiology. Having two drugs with independent mechanisms of action increases the likelihood of synergistic
benefit beyond what either drug could achieve alone. Clinical data supports these synergistic advantages.

●PSX-001: Our psilocybin treatment comprises administration of PSX-001 with psychological support from trained therapists. Evidence
suggests psilocybin may have beneficial effects across several mental health conditions, and the combination with structured therapy is
designed to optimize outcomes and safety.

●Regulatory strategy: The development path for our cannabinoid programs enables pursuit of the FDA’s 505(b)(2) pathway. This
approach may substantially reduce time from drug concept to in-human trials by leveraging existing nonclinical toxicology data for the
individual agents.

●Geographic execution: Initial preclinical and early-stage clinical development was conducted primarily in Australia, providing cost
efficiency and access to the Australian R&D rebate program. With this foundation, we believe we are well positioned for development
with the FDA. We may continue to conduct certain smaller studies in Australia to generate supportive data while advancing pivotal trials
under U.S. INDs.

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IHL-42X

Obstructive Sleep Apnea or “OSA”

OSA is a disease of sleep disordered breathing
characterized by a narrowing or collapse of the upper airway during sleep, which interferes with breathing and reduces sleep quality.
Presentation of OSA often includes snoring and waking up gasping for air. Though OSA is recognized as a relatively common and chronic
disorder, it remains underdiagnosed and inadequately treated. Untreated OSA is associated with a wide range of serious long-term outcomes,
including cardiovascular disease, cognitive impairments such as memory loss, poor concentration and judgment, depression and increased
risk of death or injury due to traffic accidents resulting from excessive daytime sleepiness. The substantial patient and society costs
related to undiagnosed and diagnosed obstructive OSA include increased healthcare usage, reduced productivity, and diminished quality
of life.

A 2019 article published by The Lancet premised
on literature-based analysis of 17 studies across 16 countries, estimated that OSA affects some 936 million adults worldwide. This alarming
statistic is thought to be increasing due to the growing prevalence of obesity and an aging global population. Many people with OSA develop
high blood pressure (hypertension), which can increase the risk of cardiovascular disease. OSA is considered a serious medical condition;
the more severe the OSA, the greater the risk of coronary artery disease, heart attack, heart failure, stroke and shortened life span.

There are limited drug treatment options for OSA.
Certain drug products containing tirzepatide, a GLP-1 agonist, are approved for treatment of OSA in obese patients. Tirzepatide is also
approved to treat obesity, reducing body mass index. There is a well-established link between obesity and OSA risk, and one of the consequences
of reducing body mass index in obese patients with OSA is improvement of OSA severity. However, tirzepatide does not treat the pathophysiological
mechanisms of OSA outside of obesity and is not an available option for non-obese OSA patients, which is estimated to be greater than
67% of the OSA patient population.

Available non-pharmacological treatment options
for OSA include: the standard of care, positive airway pressure (“PAP”), including continuous positive airway pressure (“CPAP”),
in which an external device pneumatically splints the airway open to prevent disruptions in breathing; oral appliances to advance the
mandible or to retain the tongue, putting the mouth in a position more conducive to breathing; surgery to remove physical obstructions
to airflow; and implantable electronic stimulators to activate muscles at the base of the tongue, opening the airway in synchrony with
respiration. An estimated 50% of patients discontinue CPAP treatment within one year. Patient compliance to PAP devices is low due to
discomfort and claustrophobia resulting from pressurized air being pumped into the patient’s nose and/or mouth via a mask or nasal
pillow during sleep. These available treatment options, in many cases, are poorly tolerated, inadequate, expensive, and for implantable
stimulators and surgery, invasive.

Despite these discomforts, the global annual market
for sleep apnea devices is over US$8.2 billion and growing. The estimated compound annual growth rate for the global market of OSA devices
from 2024 to 2029 is 7.33%.

IHL-42X in OSA

IHL-42X is an oral fixed-dose combination of acetazolamide,
a carbonic anhydrase inhibitor approved for various indications, and dronabinol, a synthetic form of delta-9-tetrahydrocannabinol (“THC”)
approved for the treatment of nausea, vomiting and loss of appetite. Both agents have been shown in clinical studies to reduce the AHI.
We believe that the activity of dronabinol on cannabinoid receptors causes dilation of the airway, and acetazolamide induces modest metabolic
acidosis, signaling to the body that there is excess CO2 in the blood, thus increasing respiration. By combining two agents with mechanisms
known to reduce AHI in one pharmaceutical formulation, we believe IHL-42X may have therapeutic benefit at lower doses of each constituent
drug that are safe and tolerable.

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Phase 2 Clinical Trial for IHL-42X for OSA

We completed a Phase 2 clinical trial in Australia
to investigate the safety and efficacy of IHL-42X for the treatment of OSA. This study established proof-of-concept, the combination reduced
AHI in patients with OSA.

The primary endpoint of this Australian Phase 2
clinical trial was the change in AHI relative to baseline, and the secondary endpoints included change in oxygen desaturation index (“ODI”),
daytime somnolence measured by the Epworth Sleepiness Scale (“ESS”), improvement in mood as measured by the Profile of Moods
State (“POMS”), and well-being as measured by the Short Form 36. Safety of the IHL-42X combination was assessed through adverse
event monitoring. Participants completed a single-blind placebo treatment period followed by three double-blind IHL-42X treatment periods,
each with a different dose strength of IHL-42X. Each treatment period was seven days with an overnight sleep study on night seven to determine
AHI and other secondary endpoint data. Blood samples were collected the morning after the sleep study and analyzed for THC content.

In the final analysis of data from this
trial, IHL-42X was observed to reduce AHI at all three dose strengths (2.5 mg dronabinol + 125 mg acetazolamide, 5 mg dronabinol +
250 mg acetazolamide, and 10 mg dronabinol + 500 mg acetazolamide). The lowest dose (2.5 mg dronabinol + 125 mg acetazolamide ) was
observed to be the most effective, reducing AHI by an average of 50.7 % relative to baseline, with 25% of subjects’ AHI
reduced by >80%. With low-dose IHL-42X, THC was cleared below the common threshold for impaired driving (1 ng/mL) by the morning
after dosing. Subjects also reported improved sleep quality during IHL-42X treatment periods compared to placebo.

IHL-42X was observed to be generally well-tolerated
with no serious adverse events observed at any dosage level. Adverse events were recorded from the time the subjects enrolled in the trial
until their end-of-study visit. After recording TEAEs, the study team, including investigators and medical monitors, reviewed the TEAEs
to determine whether they were likely related to the drug candidate. Of the 11 subjects studied, TEAEs deemed to be possibly, probably,
or related to study treatment occurred at a higher incidence at the higher doses on dronabinol/acetazolamide (5 mg dronabinol plus 250
mg acetazolamide and 10 mg dronabinol plus 500 mg acetazolamide) compared to the low (2.5 mg dronabinol plus 125 mg acetazolamide) dose
and placebo treatment periods.

Low dose IHL-42X had a similar proportion of subjects
reporting TEAEs and a lower number of total TEAEs than the placebo. This indicated that low-dose IHL-42X was well-tolerated.

This Phase 2 clinical trial both supported our
FDA IND submission and informed the design of the ongoing Phase 2/3 clinical trial (or the RePOSA Study, as discussed below).

Formulation Development and Manufacturing of IHL-42X

We engaged Procaps Group, S.A. (“Procaps”)
for the manufacture of a specific oral fixed-dose formulation of IHL-42X for our clinical trials.

Bioavailability/Bioequivalence Clinical Trial

We conducted a bioequivalence/bioavailability (“BA/BE”)
clinical trial for IHL-42X. The BA/BE study focused on assessing the pharmacokinetics (“PK”) and tolerability of IHL-42X’s
active pharmaceutical ingredients (“APIs”), dronabinol (a synthetic form of THC) and acetazolamide, in comparison to FDA reference
listed drugs Marinol (dronabinol) and acetazolamide oral tablets manufactured by Taro Pharmaceutical Industries. The trial also investigated
the effect of food on IHL-42X tolerability and PK. The BA/BE study was designed to evaluate the concentrations of APIs and metabolites
in blood samples over 48 hours, and to adhere to FDA recommendations for bioequivalence studies. In January 2025, we announced positive
topline results from this trial. These topline results confirmed bioavailability of IHL-42X, demonstrating delivery of both dronabinol
and acetazolamide. The PK profile of IHL-42X was similar to those observed for the respective reference listed drugs, including equivalent
total exposure levels (“AUCinf”) observed for the drug molecules. Furthermore, administration of IHL-42X with food, in contrast
to fasted conditions, indicated no substantial food effect on overall exposure to acetazolamide. Consistent with what is known for the
reference listed drugs, an increase in overall exposure to THC was observed when IHL-42X was administered with food compared to fasted
state. No serious adverse events were reported during the trial. TEAEs were generally observed to be mild to moderate. The proportion
of subjects reporting at least one TEAE on the IHL-42X fasted period (57.4%) was similar to the dronabinol fasted period (52.1%). Fewer
subjects reported TEAEs during the acetazolamide fasted treatment period (37.8%). Food did not have a substantial effect on the number
of subjects reporting TEAEs for IHL-42X, with 57.4% fasted vs 58.8% fed.

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We expect the outcomes of the BA/BE trial will
serve as a bridging mechanism to the reference listed drugs, potentially facilitating regulatory approval via the FDA 505(b)(2) regulatory
pathway.

Phase 2/3 Clinical Trial Investigating IHL-42X in Patients with
OSA (the “RePOSA Study”)

The RePOSA Study is a randomized, double-blind
Phase 2/3 clinical trial, investigating the effect of IHL-42X in patients with OSA who are non-compliant, intolerant or naïve to
PAP devices, such as CPAP, to determine the safety and efficacy of the drug candidate. The RePOSA study is being conducted in accordance
with an IND cleared by the FDA.

The primary endpoint of the RePOSA Study is a change
in AHI as compared to baseline. Key secondary endpoints include a change in patient sleep quality, sleep related impairments and fatigue.
Other secondary endpoints include a change in oxygen saturation index, hypoxic burden and sleepiness. Exploratory endpoints are change
in sleep architecture, cognitive function, blood pressure and other biomarkers identified for those at risk for OSA. The Phase 2 portion
of the RePOSA Study was a four-week, dose ranging, three-arm (IHL-42X low dose (2.5 mg dronabinol + 125 mg acetazolamide), IHL-42X high
dose (5 mg dronabinol + 250 mg acetazolamide) and placebo) trial designed to determine the optimal dose of IHL-42X based on safety and
efficacy in OSA patients. The Phase 3 portion of the trial is a 52-week, four-arm (IHL-42X, dronabinol, acetazolamide and placebo), factorial
trial that will compare the optimal dose of IHL-42X to the component APIs, dronabinol and acetazolamide, at equivalent doses, as well
as placebo. The endpoints, inclusion criteria and study procedures are similar across both component studies, which is designed to streamline
the transition process from Phase 2 to Phase 3.

The Phase 2 portion of the RePOSA Study was completed
in July 2025 and demonstrated statistically and clinically significant improvements across multiple key endpoints for patients receiving
IHL-42X compared to placebo, highlighting its potential to reduce OSA severity and enhance patient quality of life:

●AHI: The
low-dose and high-dose IHL-42X groups achieved a statistically significant reduction in percent
change in AHI from baseline compared to placebo (p<0.05), the primary measure of OSA severity.
Maximum reductions in AHI were observed at up to 83% for the high-dose group and up to 79%
for the low-dose group. Notably, 33.3% of patients in the low-dose group and 41.2% in the
high-dose group achieved a greater than 30% reduction in AHI, while 13.9% (low-dose) and
14.7% (high-dose) experienced reductions exceeding 50%—demonstrating a strong therapeutic
response in a substantial subset of the population.

●Patient
Global Impression of Change (“PGI-C”) Sleep Related Impairment: The low-dose
IHL-42X group showed statistically significant improvement (p<0.05) in PGI-C, reflecting
meaningful patient-perceived benefits.

●PGI-C
Fatigue: Statistically significant improvement in PGI-C Fatigue was observed in the low-dose
group, suggesting enhanced daytime alertness and reduced fatigue.

●ODI:
Both low- and high-dose groups demonstrated statistically significant improvements in ODI,
indicating better oxygenation during sleep.

●Patient-Reported
Outcomes: IHL-42X led to clinically significant improvements in patient-reported outcome
measures, including the Functional Outcomes of Sleep Questionnaire-10, Patient-Reported Outcomes
Measurement Information System (“PROMIS”) Sleep-Related Impairment 8a, PROMIS
Fatigue 7a, and ESS in both low- and high-dose groups, demonstrating enhanced sleep quality,
reduced daytime fatigue, and improved daily functioning for patients with OSA.

●Polysomnography (“PSG”) Metrics: IHL-42X drastically improved objective sleep parameters as measured by PSG.

●Wake After Sleep Onset: Reduced by 29.8% in the high-dose arm, meaning patients spent less time awake during the night.

●AHI During Supine Sleep: Decreased by 30.3% in the high-dose arm, a critical improvement given supine sleep exacerbates apneic
events.

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●Rapid Eye Movement (“REM”) Sleep: IHL-42X did not reduce the proportion of time spent
in REM sleep, as measured in the PSGs. This distinguishes IHL-42X from many drugs that are approved for other sleep indications, which
are known to reduce the amount of time spent in REM sleep. REM is an important stage of sleep that contributes to memory consolidation,
emotional regulation and brain health.

IHL-42X was also observed to be well-tolerated
across both low- and high-dose cohorts. No serious adverse events were reported during the treatment period, and TEAEs were infrequent,
with the majority being mild or moderate in severity.

We are finalizing arrangements for our End of Phase
2 meeting with the FDA to get feedback on planned next steps, including a pivotal Phase 3 trial design.

General Anxiety Disorder

Generalized Anxiety Disorder or “GAD”

GAD is a chronic, often debilitating mental health
disorder that affects approximately 10% of U.S. adults in their lifetimes. Symptoms of GAD include excessive anxiety and worry that persist
for over six months, which can lead to significant impairments in social, occupational and other functioning, according to the National
Institute of Mental Health. GAD is the most common anxiety disorder seen in primary care settings. An estimated 6.8 million adults are
diagnosed with GAD in a given year in the United States.

Existing Treatments

There is a significant unmet need for new therapies
in GAD. Current recommendations for GAD treatment include selective serotonin reuptake inhibitors (“SSRIs”), serotonin and
noradrenaline reuptake inhibitors (“SNRIs”), and pregabalin as first-line options, with benzodiazepines as second-line options.
GAD is also treated with psychotherapy alone or in combination with pharmacotherapies. However, these treatments have significant limitations,
including a delayed onset of action, poor therapy adherence rates and substantial treatment side effects. In particular, the side effects
associated with long-term use of these pharmacotherapies include emotional numbness, reduced positivity, weight gain, sexual dysfunction,
and suicidal thoughts.

Psychedelic-Assisted Psychotherapy as a Treatment in Mental Health

Psychedelic-assisted psychotherapy may provide
rapid, significant, and lasting benefits in treating unipolar depression, depression and anxiety symptoms associated with a terminal illness,
and substance misuse. Psilocybin is a psychoactive molecule that occurs naturally in several genera of mushrooms, which primarily acts
on the serotonin receptor system, and can modulate states of consciousness, cognition, perception, and mood.

Over the past decade, there has been an accumulating
body of evidence that psilocybin may have beneficial effects in anxiety, depression, and other mental health conditions. In these studies,
administration of psilocybin with psychological support from trained therapists provided a rapid reduction in anxiety and depression symptoms
on the day of administration with generally maintained treatment effects at follow-up assessments many months later. These studies have
shown psilocybin to be generally well-tolerated. Most studies do not report serious adverse events.

Two psilocybin third-party research programs for
depression have received breakthrough therapy designation from the FDA. A small number of other psilocybin treatment development programs
are underway globally. Should the results from any of these research programs be positive, approval of psilocybin-assisted psychotherapy
as a prescription treatment could occur within the next five years.

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PSX-001 for GAD

Our oral psilocybin lead candidate, PSX-001 is
designed to be used in combination with psychological therapy from trained therapists that has been specifically designed for patients
diagnosed with GAD. The therapy is designed to optimize patient safety and therapeutic outcomes in GAD with specific support before, during
and after PSX-001 dosing sessions.

Our psilocybin treatment includes administration
of two therapeutic doses of our drug candidate, PSX-001, with psychological support from trained therapists before, during and after each
dose session. The psychotherapy comprises three distinct phases:

●Preparation psychotherapy: conducted following full enrollment and prior to the first dosing session with a key focus on explaining
the concept of the trial and principles of the psychotherapy program to the patient, gaining and understanding of the patient’s
presenting problem(s), establishing a safety plan and dosing day plan and conducting experiential exercises.

●Dosing sessions: the patients will be administered PSX-001 orally. Prior to dosing, the safety and dosing day plan are reviewed. Once
the patient is deemed ready for dosing the dose will be administered and the study team will provide support for navigating the experience.

●Integration psychotherapy: conducted following the dosing sessions, with a key focus on reviewing the dosing session, identifying
and exploring experiential avoidance that emerged in the dosing session and values-based actions.

Phase 2 Exploratory Proof-of-Concept Clinical Trial

We conducted an Australian Phase 2 exploratory,
proof-of-concept clinical trial, known as PsiGAD1, pursuant to an approval from the Human Research Ethics Committee.

The trial was a Phase 2 randomized triple-blind
active-placebo-controlled trial to assess the safety and efficacy of psilocybin-assisted psychotherapy for GAD. Participants experienced
two psilocybin or active-placebo dosing sessions and up to 11 non-drug, specialist psychotherapy sessions over a period of ten weeks.

Primary outcomes were safety, efficacy and tolerability,
and secondary outcomes included quality of life, functional impairment, and comorbidities. Safety was assessed by monitoring adverse events
including but not limited to liver function tests and scores on the Ultra Brief Checklist of Suicidality. Efficacy was assessed by comparing
the change in HAM-A scores from baseline between the placebo and treatment group. Tolerability was assessed by comparing the proportion
of participants who complete both dosing sessions in the placebo and treatment groups. Secondary endpoints were assessed by monitoring
disability, comorbidity, productivity and quality of life using patient reported outcome measures.

In August 2025, we reported full results which
demonstrated that the trial met its primary endpoint, supporting a clinical effect in the psilocybin treatment group compared to the placebo
group. Statistically meaningful reductions in HAM-A scores were observed, with patients being treated with PSX-001 achieving an average
12.8-point reduction from baseline that was sustained for an 11-week follow-up period. A greater than 50% reduction in HAM-A scores was
observed in 44.1% of patients receiving treatment, and 24% of patients receiving treatment achieved full disease remission, a number five
times higher than placebo. Improvements were also observed in secondary endpoint measures including, (i) an average 7.4-point reduction
in Generalized Anxiety Disorder 7-item scale scores, compared to a 3.5-point reduction for placebo (p<0.0004), (ii) a 6.0-point reduction
in Sheehan Disability Scale scores, versus 1.3 points in the placebo group (p<0.007), (iii) a 3.9-point reduction in Patient Health
Questionnaire-9 scores compared to just 0.3 points in the placebo group (p<0.005), and (iv) an improvement in Personal Wellbeing Index,
also known as “quality of life,” by an average of 10.6 points in the Psi-GAD group versus 2.7 points for placebo—a statistically
significant difference (p<0.002). PSX-001, within the context of psychotherapy, was observed to be well-tolerated with no serious adverse
events reported. The majority of TEAEs were transient, mild to moderate in nature and consistent with the expected pharmacological effects
of psilocybin. Only one of the 73 participants withdrew from the trial during the 7-week treatment program. No signs of increased suicidality,
psychosis, or prolonged psychological distress, concerns often cited with psychedelic treatments, were observed.

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Next Steps in PSX-001 Clinical Development

The FDA has completed its review of and cleared
our IND and gave its authorization for us to proceed with a Phase 2b clinical trial investigating PSX-001 in patients diagnosed with GAD.
We are preparing to initiate this trial in 2026. This Phase 2b trial is expected to include approximately 94 subjects (including those
currently treated with SSRIs who meet the study inclusion and exclusion criteria), evaluate change in the HAM-A anxiety score and other
measures of efficacy and be conducted at multiple sites in the United States and the United Kingdom. The required review of the trial
dossier by the UK’s Medicines and Healthcare products Regulatory Agency (“MHRA”) has also been completed. We have designed
the follow-up Phase 2b clinical trial with the assistance of Clerkenwell Health, a UK-based contract research organization (“CRO”)
specializing in psychiatry and central nervous system treatments.

Development and Manufacture of Current Good Manufacturing Practices
(“cGMP”) Psilocybin Drug Product

We have engaged Ardena US LLC (formerly
Catalent Pharma Solutions LLC) for the development and cGMP manufacture of Incannex’s oral psilocybin drug candidate, PSX-001.
This drug candidate will be used in our planned clinical trials.

Model Mental Health Clinic for Psychedelic-Assisted Psychotherapy

On June 17, 2025, we announced our 50:50 joint
venture with Mind Medicine Australia (“MMA”) to operate a psychedelic-assisted therapies services clinic in Melbourne, Australia.
The new entity, MMA Clinics, represents a strategic advancement in our commercialization model. The joint venture will deliver a fully
integrated suite of services including clinical operations, governance, medicine supply, medical oversight, and marketing support to a
growing network of aligned authorized prescribers across Australia.

IHL-675A

We are developing IHL-675A, an oral fixed-dose
combination drug candidate that contains synthetic CBD and hydroxychloroquine sulphate (“HCQ”) for the treatment of inflammatory
conditions, with an initial focus on rheumatoid arthritis. Inflammatory conditions occur when the body’s immune system attacks its
own tissues and organs causing inflammation, pain, discomfort, and damage to the affected tissues.

IHL-675A comprises a combination of hydroxychloroquine
sulphate, an approved anti-rheumatic drug, and synthetic CBD. HCQ is a disease modifying antirheumatic drug that regulates the activity
of the immune system, which may be overactive in some conditions. HCQ can modify the underlying disease process, rather than simply treating
the symptoms. In our in vitro studies and disease model experiments, we demonstrated that IHL-675A components, CBD and HCQ, act synergistically
to inhibit production of key inflammatory cytokines as well as other key measures of disease severity. Based on the results of these experiments,
we believe IHL-675A also has the potential for use in rheumatoid arthritis and other inflammatory conditions, such as acute respiratory
distress syndrome, COPD, asthma, bronchitis and inflammatory bowel diseases, e.g. colitis and Crohn’s disease. The rheumatoid arthritis
market in the United States is growing rapidly with sales for rheumatoid arthritis treatments reaching US$25.37 billion in 2023. This
market is expected to exceed US$31.58 billion by 2033.

Manufacturing Arrangements

We engaged Procaps for the manufacture of a specific
oral, fixed-dose formulation of IHL-675A for our clinical trials.

Rheumatoid Arthritis

Rheumatoid arthritis is a chronic inflammatory
disorder that can affect joints, skin, eyes, lungs, heart and blood vessels. As an autoimmune disorder, rheumatoid arthritis is caused
by attacks to body tissues by one’s immune system. Unlike the wear-and-tear damage caused by osteoarthritis, rheumatoid arthritis
causes a painful swelling that can eventually result in bone erosion and joint deformity. HCQ is approved for treatment of rheumatoid
arthritis in the form of hydroxychloroquine sulphate and marketed as Plaquenil and generic equivalents.

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Phase 1 Clinical Trial for IHL-675A

We have completed a Phase 1 clinical trial to assess
the safety and PK of IHL-675A in healthy volunteers, the results of which will form part of our planned FDA IND for rheumatoid arthritis,
and potentially lung inflammation and inflammatory bowel disease. The key endpoints of the trial were the adverse events reported and
the plasma levels of the APIs, CBD and HCQ, and their major metabolites over a 28-day period. Three cohorts of 12 participants (n = 36)
received either IHL-675A, Epidiolex (CBD) or Plaquenil (HCQ) and the assessments were identical across the three arms of the trial. The
trial measured the safety, tolerability, and PK profiles of IHL-675A compared to the reference listed drugs, Epidiolex (CBD) and Plaquenil
(HCQ).

CBD and HCQ have historically been used independently
in treating rheumatoid arthritis and other inflammatory disorders. However, as with any pharmaceuticals, there were risks involved when
evaluating as a combination. Part of the strategy in the design of IHL-675A was that the combination of CBD with HCQ permitted a reduction
in HCQ, which reduced the known risks associated with cumulative HCQ dose, without sacrificing efficacy. Results from the in vitro preclinical
studies we conducted prior to the trial led to the hypothesis that a lower cumulative dose of HCQ, when combined with CBD, would also
reduce disease severity scores in IHL-675A’s target indications in humans. Nonetheless, there was always the potential for the two
drugs to interact and exacerbate minor concerns that exist when used alone or lead to new safety concerns. Demonstrating that a combination
drug containing CBD and HCQ had a similar safety profile to the component drugs was an important step in the development program and was
a requirement set out by regulatory agencies. Safety assessments in this trial included cardiac monitoring via 24-hour Holter monitor
and electrocardiogram, and blood biomarkers, serum liver enzyme levels, blood cell counts and biochemistry, monitoring of vital signs
and mental health questionnaires.

The other component of this trial was monitoring
the PK of the API of IHL-675A, CBD and HCQ, and comparing them to their respective reference listed drugs Epidiolex and Plaquenil. Study
participants were dosed with either IHL-675A, Epidiolex or Plaquenil with equivalent amounts of the respective API. Blood samples were
drawn at predetermined intervals over a 48-hour period, as well as seven, 14, 21 and 28 days post dosing, and analyzed for levels of CBD
and HCQ as well as their major metabolites. For each molecule the maximum concentration (“Cmax”), time to maximum concentration
(“Tmax”) and AUCinf were determined. The PK parameters for IHL-675A, Epidiolex and Plaquenil were compared to determine whether
the APIs in IHL-675A were bioequivalent to the reference listed drugs. Bioequivalence is an important component of the FDA 505(b)2 approval
pathway that Incannex is targeting with IHL-675A.

Based on final available study results, IHL-675A
was observed to be well-tolerated and both the APIs were bioavailable. The results of this study were published in a peer reviewed journal
in 2025 (Mbogo, George Williams, et al. “An open-label phase I comparator-controlled clinical trial to assess tolerability and PKs
of IHL-675A a fixed-dose combination of CBD plus hydroxychloroquine in healthy volunteers.” Scientific Reports 15.1 (2025): 19357.).

CBD PK Results

Comparison of the average PK of CBD in participants
administered IHL-675A compared to those administered Epidiolex revealed that the CBD was taken up from IHL-675A more quickly and reached
a higher Cmax than from Epidiolex. The average Cmax of CBD from IHL-675A was 1.57 times higher than for Epidiolex. The Tmax was 26% faster
for IHL-675A than Epidiolex. CBD administered in IHL-675A was also cleared more quickly than Epidiolex. The half-life (t1/2) of CBD from
IHL-675A was 13% faster than Epidiolex. The AUCinf was similar for CBD administered as IHL-675A and Epidiolex. These patterns are trends
at this point (p >0.05). Similar results were observed for CBD metabolites 7-COOH-CBD and 7-OH-CBD.

Hydroxychloroquine PK Results

A comparison of the average PK of HCQ in participants
administered IHL-675A compared to those administered Plaquenil revealed that HCQ was taken up more slowly from IHL-675A than from Plaquenil.
However, the two drugs had a similar maximum plasma concentration. The Tmax for HCQ administered as IHL-675A was 46% slower than for Plaquenil.
The hydroxychloroquine clearance and total exposure were similar for the two drugs. These patterns are trends at this point (p >0.05).
Plasma concentrations of hydroxychloroquine of HCQ metabolites desethylhydroxychloroquine, bisdesethylhydroxychloroquine and desethylchloroquine
were detected only at low levels (<2 ng/mL) at all points in the study.

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Tolerance

IHL-675A was observed to be well-tolerated, with
no serious adverse events reported. The same number of treatment related TEAEs were reported for IHL-675A as for Epidiolex. Fewer treatment
related TEAEs were reported for Plaquenil. All treatment related TEAEs were minor, with the exception of one incidence of moderate severity
abdominal cramps, which was resolved soon after onset.

Interpretation of the Results from the Phase 1 Clinical Trial

Both APIs, CBD and HCQ, were absorbed from IHL-675A.
Trends in PK profiles indicated that the uptake of CBD may be more rapid for IHL-675A than Epidiolex and uptake of HCQ may be slower for
IHL-675A than Plaquenil. This could be advantageous for IHL-675A. Clinical evidence suggests that CBD provides immediate relief for inflammation
and pain, whereas HCQ is a slower acting molecule and provides extended relief.

Phase 2 Clinical Trial Assessing the Effects of IHL-675A on Pain
and Function in Patients with Rheumatoid Arthritis

We planned to conduct a Phase 2 clinical trial
in Australia to assess the safety and efficacy of IHL-675A on pain and function in patients with rheumatoid arthritis. The trial was planned
to include approximately 128 subjects who met the eligibility criteria and who upon enrollment would have been be randomized according
to one of four arms: either IHL-675A, CBD alone, HCQ alone or placebo. The treatments were to be double blinded, meaning neither the investigators
nor patients would have known which treatment an individual was receiving.

The primary endpoint for the Phase 2 trial was
pain and function relative to baseline determined via the score on the RAPID3 assessment at 24 weeks. Per the protocol, participants were
to record their pain and function outcomes daily, by completing questionnaires on pain, fatigue, joint stiffness and quality of life,
using an electronic patient reported outcomes device (similar to completing a questionnaire on an electronic tablet). The participants
also attended monthly visits at the clinical trial site, where blood tests, and physical examinations were to monitor additional safety
and efficacy outcomes, including inflammatory biomarkers. This study was terminated prior to completion due to challenges with patient
recruitment. Insufficient data was collected to make any conclusions on safety or efficacy of IHL-675A.

FDA Development

We have completed pre-IND meetings with the FDA
to discuss the regulatory pathway for the development of IHL-675A for rheumatoid arthritis and inflammatory lung conditions in the United
States and plan to initially open an IND for a Phase 2 trial for rheumatoid arthritis. The FDA provided guidance on the requirements for
505(b)(2) NDA submissions, as was proposed for IHL-675A, that rely on the FDA’s finding of safety and/or effectiveness for listed
drugs. In the pre-IND meeting for use of IHL-675A for treatment of rheumatoid arthritis, the FDA confirmed that no further non-clinical
studies are needed to open an IND and provided guidance on the proposed clinical development plan for IHL-675A in rheumatoid arthritis.
We are currently building on the feedback from FDA to design an IND opening study to investigate the safety and efficacy of IHL-675A
in patients diagnosed with rheumatoid arthritis.

Secondary Assets and Additional Opportunities

While we are focusing our available resources on
the continued development of our three lead drug candidates in the above indications, we are also exploring the development of 25 other
secondary assets where we believe proof-of-concept has been established in either preclinical studies, Phase 1 clinical trials or Phase
2 clinical trials.

These secondary drug candidates target a variety
of potentially high-value indications, including topical cannabinoid candidates for various skin conditions (estimated global market size
US$1.8 billion in 2021), a chewable candidate for smoking cessation (estimated global market size US$28.9 billion in 2024 with estimated
9.2% CAGR) and a candidate for the treatment of opioid addiction (estimated global market size of $4.59 billion in 2021). We also believe
our lead drug candidate, IHL-675A, may be able to treat inflammatory bowel disease (estimated U.S. market size US$21 billion in 2021)
and pulmonary inflammatory diseases such as COPD and asthma (estimated combined U.S. market size US$36.7 billion in 2022).

Intellectual Property

We strive to protect the proprietary know-how and
technology that we believe is important to our business, including seeking and maintaining patents intended to cover our drug candidates
and compositions, their methods of use and processes for their manufacture, and any other aspects of inventions that are commercially
important to the development of our business. In addition to pursuing patent protection for all our assets, we rely on unpatented trade
secrets, know-how and other confidential information as well as proprietary technological innovation and expertise that are protected
in part by confidentiality and invention assignment agreements with our employees, advisors and consultants.

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We plan to continue to expand our intellectual
property estate by filing patent applications directed to compositions, methods of use, treatment and patient selection, formulations
and manufacturing processes created or identified from our ongoing development of our drug candidates. We have two primary patent families
in our lead drug candidates, including IHL-42X and IHL-675A. Our IHL-42X patent portfolio consists of 12 pending applications, and our
IHL-675A patent portfolio consists of 16 pending applications. If granted, the patent applications in the IHL-42X patent portfolio are
expected to expire as far out as 2041 to 2043, and the patent applications in the IHL-675A patent portfolio are expected to expire as
far out as 2041 to 2042 (in each case, subject to any patent term disclaimers, adjustments, or extensions). Patent applications in each
of these families are active in multiple jurisdictions, including, the United States, Australia, Canada, Colombia, European Patent Organization,
Israel, New Zealand, and Japan. We are currently exploring potential patent protection strategies for our lead drug candidate, PSX-001.

Product/Technology

Number of

Applications

Type of Patent

Protection

Applicable

jurisdictions

IHL-42X/Compositions and methods for the treatment of obstructive sleep apnoea (OSA)

12

Standard/utility

AU, CA, CO, EP, IL, JP, NZ, US

IHL-675A/Compositions and methods for the treatment of an inflammatory conditions

16

Standard/utility

AU, CA, CO, EP, IL, JP, NZ, US

We plan to continue to expand our intellectual
property estate by filing patent applications directed to compositions, methods of use, treatment and patient selection, formulations
and manufacturing processes created or identified from our ongoing development of our drug candidates. Our success will depend on our
ability to obtain and maintain patent and other proprietary protection for commercially important technology, inventions and know-how
related to our business; defend and enforce our patents; preserve the confidentiality of our trade secrets; and operate without infringing
the valid and enforceable patents and proprietary rights of third parties. We seek to obtain domestic and international patent protection,
and endeavor to promptly file patent applications for new commercially valuable inventions.

The patent positions of biopharmaceutical companies
like us are generally uncertain and involve complex legal, scientific and factual questions. In addition, the coverage claimed in a patent
application can be significantly reduced before the patent is issued, and patent scope can be reinterpreted by the courts after issuance.
Moreover, many jurisdictions, including the United States, permit third parties to challenge issued patents in administrative proceedings,
which may result in further narrowing or even cancellation of patent claims. We cannot predict whether the patent applications we are
currently pursuing, or may in the future pursue, will issue as patents in any particular jurisdiction or whether the claims of any issued
patents will be enforceable or provide sufficient protection from competitors.

Because patent applications in the United States
and certain other jurisdictions are maintained in secrecy for 18 months or potentially even longer, and since publication of discoveries
in the scientific or patent literature often lags behind actual discoveries, we cannot be certain of the priority of inventions covered
by our issued patents, our pending patent applications or of patent applications we may file in the future. Moreover, we may have to participate
in interference proceedings or derivation proceedings declared by the U.S. Patent and Trademark Office (“USPTO”), or similar
proceedings outside the United States, to determine priority of invention.

We also own trademark registrations in Australia
and the United States to distinguish and/or protect our brand, including our company name and logo.

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Competition

We are targeting indications that have limited,
inadequate, or no approved pharmaceutical treatment options. The table below outlines existing drugs and therapies used to treat the illnesses
we aim to treat with our drug candidates and what believe are some of the associated pitfalls for patients with these existing drugs and
therapies.

IHL Drug Candidate

Indication

Existing Drugs and

Therapies

Existing Drug and Therapy Pitfalls

IHL-42X

Obstructive Sleep Apnea

- PAP device, dental device, surgery, Zepbound (tirzepatide)

- Noisy mechanical device worn during sleep.

- Potential poor patient compliance due to discomfort.

- Surgery is invasive

-Tirzepatide is only approved for the treatment of obese OSA patients,
and these obese patients represent approximately 33% of all OSA patients worldwide.

IHL-675A

Rheumatoid Arthritis

- Corticosteroids

- DMARDS

- Biologic agents

- High expense, significant side effect profiles.

- Lack of efficacy or tolerability in certain patient cohorts.

IHL-675A

Lung Inflammation

- Corticosteroids

- Ventilator

- Corticosteroids reduce immune system activity.

- Ventilators are associated with a high rate of mortality.

IHL-675A

Inflammatory Bowel Disease

- Corticosteroids

- Immune system suppressors (ISSs)

- Biologic agents

- Corticosteroids can reduce immune system activity.

- ISSs can damage the digestive tract lining.

PSX-001

Generalized Anxiety Disorder

- Antidepressants (SSRI/SNRI classes)

- Non-curative, poor side effect profile.

- Some patients become treatment resistant.

However, the biopharmaceuticals
industry is highly competitive. While we believe that our investigational synthetic cannabinoid-combination and psychedelic-assisted treatments
represent a fundamental shift in the treatment paradigm relative to other treatments for these serious, chronic diseases, we face or may
face potential competition from many different sources, including major pharmaceutical, biopharmaceutical, specialty pharmaceutical and
biotechnology companies, academic institutions, governmental agencies and medical research organizations. Many of our competitors may
have significantly greater financial, manufacturing, marketing, drug development, technical and human resources than we do. Accordingly,
our potential competitors may succeed in obtaining FDA or other regulatory approval for alternative or superior products. Any drug candidates
that we successfully develop will compete with the standard of care and new therapies that may become available in the future.

Our competitors also may compete with us in recruiting and retaining
qualified scientific and management personnel, in establishing clinical trial sites and enrolling subjects for our clinical trials and
in acquiring technologies complementary to, or necessary for, our programs. In addition, competitors may have higher name recognition
and more extensive collaborative relationships. Mergers and acquisitions in the pharmaceutical, biotechnology and diagnostic industries
may result in even more resources being concentrated among a smaller number of competitors. Smaller or emerging earlier stage companies
may also prove to be significant competitors, particularly if they have collaborations with larger, established companies. Competitors
in the OSA drug development space include Apnimed, Inc. and Mineralys Therapeutics. In particular, Apnimed’s lead product candidate
for OSA, AD109, has completed both Phase 2b and Phase 3 trials with topline results from its Phase 3 trials announced in May and July
2025. A number of companies are developing drug candidates intended for the treatment of GAD, including Cybin Inc., Otsuka Pharmaceutical
Development & Commercialization, Inc., Sunovion Pharmaceuticals Inc., Mind Medicine Inc., and others. Competitors working on novel
biopharmaceuticals focused on modulation of the serotonin and dopamine systems include Atai Life Sciences N.V., Compass Pathways plc,
GH Research plc and others. There are a large number of existing pharmaceutical companies marketing drugs for the treatment of rheumatoid
arthritis, including Pfizer Inc., Abbvie Inc., Amgen Inc., Novartis AG, Boehringer Ingelheim International GmbH, Eli Lilly and Company,
F. Hoffmann-La Roche AG, Bristol Myers Squibb, AstraZeneca PLC, and Merck & Co., Inc. While we believe we have identified the potential
for IHL-675A to more effectively reduce pain and increase quality of life in addition to or over these existing therapies and standard
of care, IHL-675A will compete with or complement these other therapeutic options.

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We are further aware that
there are non-FDA approved cannabinoid preparations being made available from companies in the medical marijuana industry, which might
compete with our drug candidates. While federal law prohibits the sale and distribution of most marijuana products not approved or authorized
by FDA, the vast majority of states and the District of Columbia have legalized either cannabinoids or marijuana for either recreational
or medical use, or both, and congressional efforts related to legalization of marijuana continue. Further, under the U.S. Farm Bill, enacted
in late 2018, certain extracts and other material derived from cannabis are no longer controlled under the federal Controlled Substances
Act of 1970 (“CSA”). However, the marketing of such products as a food, dietary supplement, or for medical purposes remains
subject to FDA requirements. With respect to the marketing of CBD as a food or dietary supplement, in January 2023, the FDA concluded
that the existing regulatory frameworks for foods and supplements were not appropriate for CBD products and denied three citizen petitions
that had asked the agency to conduct rulemaking to allow the marketing of CBD products as dietary supplements. In addition, following
receipt of a scientific and medical evaluation of marijuana from the Department of Health and Human Services (“HHS”) recommending
that the substance be moved from Schedule I to Schedule III, the U.S. Drug Enforcement Administration (“DEA”) issued a notice
of proposed rulemaking in May 2024 to effectuate such rescheduling. The public comment period on the proposed rule ended in mid-2024 and
a public hearing on the proposal was scheduled by DEA for January 2025. The DEA hearing was postponed indefinitely by the presiding administrative
law judge, and as of September 2025, the rulemaking appears stalled and marijuana remains a Schedule I substance. However, President Trump
has expressed interest in rescheduling marijuana and his administration is continuing to evaluate the Schedule III proposal. Although
our business is distinct from that of entities marketing FDA-unapproved marijuana and CBD-containing dietary supplements, future enacted
legislation or federal government action authorizing the sale, distribution, use, and insurance reimbursement of non-FDA approved marijuana
or CBD products could increase competition for and adversely affect our ability to generate sales from our drug candidates.

We are also aware that
a number of companies are increasing their efforts in discovery of non-traditional alternative compounds including psychedelics. A number
of for-profit biotechnology companies or institutions are specifically pursuing the development of psilocybin to treat mental health illnesses.
There are also other organizations or institutions evaluating the use of psilocybin in mental health and neurocognitive conditions. In
August 2025, the DEA forwarded to HHS a citizen petition proposing that the agencies reschedule psilocybin from Schedule I to Schedule
II under the federal CSA. Moving psilocybin to Schedule II would remove some of the onerous restrictions to which Schedule I controlled
substances are subject, including limitations on manufacturing and research. In addition, there are various companies exploring other
psychedelic compounds for the treatment of mental health and neurocognitive conditions.

Regulatory Authorities

The research, development, testing, manufacture,
quality control, approval, labeling, packaging, storage, recordkeeping, promotion, advertising, distribution, marketing, sales, among
other things, of drug products are extensively regulated by governmental authorities in the United States and other countries. We, along
with our third-party contractors, will be required to navigate the various preclinical, clinical and commercial approval and post-approval
requirements of the governing regulatory agencies of the countries in which we wish to conduct studies or seek approval or licensure of
our drug candidates.

United States

U.S. Government Regulation of Drug Products

In the United States, the FDA regulates drugs under
the Federal Food, Drug, and Cosmetic Act (“FDCA”) and its implementing regulations, which govern, among other things, pharmaceutical
product quality, safety, efficacy, development, manufacturing, testing, packaging, labeling, storage, recordkeeping, advertising and promotion.
In addition, controlled substances, like synthetic cannabidiol, THC, and psilocybin, as well as security, recordkeeping, storage, manufacturing,
distribution, and importation, among other things, are regulated by the DEA.

The process of obtaining required authorizations
from FDA or DEA and achieving and maintaining compliance with applicable laws and regulations requires the expenditure of substantial
time and financial resources. Failure to comply with applicable FDA or other requirements may result in refusal to approve pending applications,
imposition of clinical holds on ongoing trials, warning letters, civil or criminal penalties, recall or seizure of products, partial or
total suspension of production or distribution, or withdrawal of the product from the market. FDA approval is required before any new
drug, including any new indication for a previously approved drug, can be marketed in the United States.

The steps required before a drug may be marketed
in the United States generally include the following:

●completion of extensive preclinical laboratory tests, potentially including animal studies, and formulation studies in accordance
with the FDA’s good laboratory practice (“GLP”) regulations and other applicable regulations;

●submission to the FDA of an IND to support human clinical testing, which must become effective before human clinical trials may begin;

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●approval from the DEA prior to commencement of any clinical trials in the United States that involve the use of Schedule I controlled
substances, which would include our lead drug candidates, IHL-42X, PSX-001 and IHL- 675A;

●authorization from an independent institutional review board (“IRB”) or ethics committee at each clinical trial site before
each clinical trial may be initiated;

●performance of adequate and well-controlled human clinical trials in accordance with applicable IND regulations, good clinical practice
(“GCP”) requirements, and other clinical-trial related regulations to establish the safety and efficacy of the investigational
drug for each proposed indication;

●submission to the FDA of an NDA for marketing approval, including payment of application user fees;

●satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities at which the API and finished
drug product are produced and tested to assess compliance with cGMP requirements to assure that the facilities, methods and controls are
adequate to preserve the product’s identity, strength, quality and purity;

●potential FDA audit of the clinical trial sites to assure compliance with IND regulations and GCP requirements and to assure the integrity
of the clinical data submitted in support of the NDA;

●satisfactory completion of an FDA advisory committee review, if applicable; and

●FDA review and approval of the NDA/Biologics Licensing Application and DEA scheduling (for a controlled substance) prior to any commercial
marketing or sale of the drug in the United States.

Clinical Development

Before any drug candidate may be tested in humans,
it must undergo rigorous preclinical testing. Preclinical tests generally include laboratory evaluations of a drug candidate’s chemical
and biological activities, formulation and stability, as well as studies to evaluate toxicity and potential for other adverse events,
which support subsequent clinical testing and rationale for therapeutic use.

The Consolidated Appropriations Act for 2023, signed
into law on December 29, 2022, (P.L. 117-328) amended both the FDCA and Public Health Service Act to specify that nonclinical testing
for drugs and biologics, respectively, may, but is not required to, include in vivo animal testing. According to the amended language,
a sponsor may fulfill nonclinical testing requirements by completing various in vitro assays (e.g., cell-based assays, organ chips,
or microphysiological systems), in silico studies (i.e., computer modeling), other human or non-human biology-based tests (e.g.,
bioprinting), or in vivo animal tests.

The results of preclinical tests, together with
manufacturing information and analytical data, are submitted as part of an IND to the FDA. An IND is a request for authorization from
the FDA to administer an investigational product to humans and must become effective before human clinical trials may begin. A 30-day
waiting period after the submission of each IND is required before commencement of clinical testing in humans. An IND automatically becomes
effective 30 days after receipt by the FDA, unless before that time the FDA raises concerns or questions related to one or more proposed
clinical trials and places the clinical trial on a clinical hold. In such a case, the IND sponsor and the FDA must resolve any outstanding
concerns before the clinical trial can begin. As a result, submission of an IND may not result in the FDA allowing clinical trials to
commence. Clinical holds may also be imposed by the FDA at any time before or during clinical trials due to safety concerns or non-compliance.

A clinical trial involves the administration of
the investigational drug candidate to patients under the supervision of qualified investigators following GCP standards, which include
the requirement that all research subjects provide their informed consent in writing for their participation in any clinical trial (unless
the consent requirement has been waived by an IRB) along with the requirement to ensure that the data and results reported from the clinical
trials are credible and accurate. GCP requirements are meant to protect the rights and health of patients and to define the roles of clinical
trial sponsors, administrators and monitors. A clinical trial is conducted under a protocol that details, among other things, the objectives
of the trial, the criteria for determining subject eligibility, the dosing plan, the parameters to be used in monitoring safety, the procedure
for timely reporting of adverse events, and the efficacy criteria to be evaluated. Each protocol involving testing on U.S. patients and
subsequent protocol amendments must be submitted to the FDA as part of the IND.

15

Further, an IRB representing each institution that
is participating in the clinical trial must review and approve the plan for any clinical trial before it commences at that institution,
and the IRB must thereafter conduct a continuing review and re-approve the trial at least annually until completion. The IRB must review
and approve, among other things, the trial protocol and informed consent information to be provided to clinical trial subjects. An IRB
must operate in compliance with FDA regulations.

Information about certain clinical trials, including
details of the protocol and eventually study results, also must be submitted within specific time frames to the National Institutes of
Health (“NIH”), for public dissemination on the ClinicalTrials.gov data registry. Information related to the product, patient
population, phase of investigation, study sites and investigators and other aspects of the clinical trial is made public as part of the
registration of the clinical trial. Sponsors are also obligated to disclose the results of their clinical trials after completion. Disclosure
of the results of these trials can be delayed in some cases for up to two years after the date of completion of the trial. Failure to
timely register a covered clinical study or to submit study results as provided for in the law can give rise to civil monetary penalties
and also prevent the non-compliant party from receiving future grant funds from the federal government. The U.S. Department of Health
and Human Services’ Final Rule and NIH’s complementary policy on ClinicalTrials.gov registration and reporting requirements
became effective in 2017, and the government has brought enforcement against clinical trial sponsors that fail to comply with such requirements.

For purposes of supporting NDA submission and approval,
human clinical trials are typically conducted in the following sequential phases, which may overlap:

●Phase 1: Trials are initially conducted in a limited population of healthy human subjects to test the drug candidate for safety, dose
tolerance, absorption, metabolism, distribution, and excretion of the investigational product, the side effects associated with increasing
doses, and, if possible, to gain early evidence on effectiveness.

●Phase 2: The investigational product is administered to a limited patient population with a specified disease or condition to identify
possible adverse side effects and safety risks and to evaluate the preliminary efficacy, optimal dosages and dosing schedule. Multiple
Phase 2 clinical trials may be conducted to obtain information prior to beginning larger and more expensive Phase 3 clinical trials.

●Phase 3: The investigational product is administered to an expanded patient population in adequate and well-controlled studies to
further evaluate dosage, clinical efficacy and safety, generally at multiple geographically dispersed clinical trial sites. These clinical
trials are intended to establish the overall risk/benefit relationship of the investigational product and to provide, if appropriate,
an adequate basis for product labeling. These trials may include comparisons with placebo and/or other comparator treatments. The duration
of treatment is often extended to mimic the actual use of a product during marketing.

●Phase 4: Additional trials may be conducted after initial marketing approval. These trials are used to gain additional experience
from the treatment of patients in the intended therapeutic indication. In certain instances, the FDA may mandate the performance of Phase
4 clinical trials as a condition of approval of an NDA.

Concurrent with clinical trials, sponsors usually
complete additional nonclinical studies and must also develop additional information about the product and finalize a process for manufacturing
the product in commercial quantities in accordance with cGMP requirements. The manufacturing process must be capable of consistently producing
quality batches of the drug candidate and, among other things, the manufacturer must develop and validate methods for testing the identity,
strength, quality and purity of the final product. Moreover, appropriate packaging must be selected and tested, and stability studies
must be conducted to assure product integrity and demonstrate that the drug candidate does not undergo unacceptable deterioration over
its shelf life.

Congress recently amended the FDCA, as part of
the Consolidated Appropriations Act for 2023, in order to require sponsors of a Phase 3 clinical trial, or other “pivotal study”
of a new drug to support marketing authorization, to design and submit a diversity action plan for such clinical trial. The action plan
must include the sponsor’s diversity goals for enrollment, as well as a rationale for the goals and a description of how the sponsor
will meet them. Sponsors must submit a diversity action plan to the FDA by the time the sponsor submits the relevant clinical trial protocol
to the agency for review. As of the time of this filing, there is uncertainty as to what the specific requirements pertaining to a diversity
action plan may be. The FDA may grant a waiver for some or all of the requirements for a diversity action plan. If the FDA objects to
a sponsor’s proposed diversity action plan, it may delay trial initiation.

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Progress reports detailing the results of the clinical
trials must be submitted at least annually to the FDA and more frequently if serious adverse events occur. The FDA or the sponsor may
suspend or terminate a clinical trial at any time on various grounds, including a finding that the research subjects or patients are being
exposed to an unacceptable health risk. Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if
the clinical trial is not being conducted in accordance with the clinical protocol, GCP, or other IRB requirements or if the drug has
been associated with unexpected serious harm to patients.

Marketing Application Submission and FDA Review

Assuming successful completion of the required
clinical testing, the results of the preclinical studies and clinical trials, along with the information relating to the product’s
chemistry, manufacturing and controls and proposed labeling, are submitted to the FDA as part of an NDA requesting approval to market
the product for one or more indications. The NDA must contain proof of the drug candidate’s safety and substantial evidence of effectiveness
for its proposed indication or indications in the form of relevant data available from pertinent preclinical and clinical studies, including
negative or ambiguous results as well as positive findings, together with detailed information relating to the product’s chemistry,
manufacturing, controls, and proposed labeling, among other things. In particular, a marketing application must demonstrate that the manufacturing
methods and quality controls used to produce the drug product are adequate to preserve the drug’s identity, strength, quality, and
purity. Data can come from company-sponsored clinical trials intended to test the safety and effectiveness of a use of the product, or
from a number of alternative sources, including studies initiated by investigators. FDA approval of an NDA must be obtained before the
corresponding drug may be marketed in the United States.

Under the Prescription Drug User Fee Act (“PDUFA”),
each NDA submission is subject to a substantial application user fee, and the sponsor of an approved NDA is also subject to an annual
program fee. The FDA adjusts the PDUFA user fees on an annual basis. The application user fee must be paid at the time of the first submission
of the application, even if the application is being submitted on a rolling basis. Fee waivers or reductions are available in certain
circumstances, including a waiver of the application fee for the first application filed by a small business.

The FDA reviews all NDAs submitted to determine
if they are substantially complete before it accepts them for filing and may request additional information rather than accepting a submission
for filing. The FDA must make a decision on accepting an NDA for filing within 60 days of receipt and must inform the sponsor by the 74th
day after the FDA’s receipt of the submission whether the application is sufficiently complete to permit substantive review. The
FDA may refuse to file any submission that it deems incomplete or not properly reviewable at the time of submission and may request additional
information. In this event, the marketing application must be resubmitted with the additional information requested by the agency. The
resubmitted application is also subject to review before the FDA accepts it for filing.

Once an NDA is accepted for filing, the FDA’s
goal is to review the application within ten months after it accepts the application for filing, or, if the application meets the criteria
for “priority review,” six months after the FDA accepts the application for filing. The review process is often significantly
extended by FDA requests for additional information or clarification after the NDA has been accepted for filing. The review process may
be extended by the FDA for three additional months to consider new information or in the case of a clarification provided by the applicant
to address an outstanding deficiency identified by the FDA following the original submission.

During the review process, the FDA reviews the
NDA to determine, among other things, whether the product is safe and effective and whether the facility in which it is manufactured,
processed, packed, or held meets standards designed to assure the product’s continued strength, quality, and purity. The FDA may
refer any NDA, including applications for novel drug candidates which present difficult questions of safety or efficacy to an advisory
committee to provide clinical insight on application review questions. Typically, an advisory committee is a panel of independent experts,
including clinicians and other scientific experts that reviews and evaluates the application and provides a recommendation as to whether
it should be approved and under what conditions. The FDA is not bound by the recommendation of an advisory committee, but it considers
such recommendations carefully when making final decisions on approval.

The FDA likely will re-analyze the clinical trial
data, which could result in extensive discussions between the FDA and the applicant during the review process. The FDA also may require
the development of a risk evaluation and mitigation strategy (“REMS”), if it determines that a REMS is necessary to ensure
that the benefits of the drug outweigh its risks and to assure the safe use of the product. The REMS could include medication guides,
physician communication plans, assessment plans and/or elements to assure safe use, such as restricted distribution methods, patient registries
or other risk minimization tools. The FDA determines the requirement for a REMS, as well as the specific REMS provisions, on a case-by-case
basis. If the FDA concludes a REMS is needed, the sponsor of the NDA must submit a proposed REMS. The FDA will not approve an NDA without
a REMS, if required.

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Before approving an NDA, the FDA will typically
inspect the facility or facilities where the product is manufactured. The FDA will not approve an application unless it determines that
the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent manufacture of the
product within required specifications. Additionally, before approving an NDA, the FDA will typically inspect one or more clinical sites
to assure compliance with GCP. If the FDA determines that the application, manufacturing process or manufacturing facilities are not acceptable,
it will outline the deficiencies as part of the review process and often will request additional testing or information. Notwithstanding
the submission of any requested additional information, the FDA ultimately may decide that the application does not satisfy the regulatory
criteria for approval.

Under the Pediatric Research Equity Act (the “PREA”),
amendments to the FDCA, an NDA or supplement to an NDA must contain data that are adequate to assess the safety and efficacy of the drug
candidate for the claimed indications in all relevant pediatric populations and to support dosing and administration for each pediatric
population for which the product is safe and effective. The FDA may grant deferrals for submission of pediatric data or full or partial
waivers. The PREA requires a sponsor that is planning to submit a marketing application for a product that includes a new active ingredient,
new indication, new dosage form, new dosing regimen or new route of administration to submit an initial Pediatric Study Plan (“PSP”),
within 60 days of an end-of-Phase 2 meeting or, if there is no such meeting, as early as practicable before the initiation of the Phase
3 or Phase 2/3 clinical trial. The initial PSP must include an outline of the pediatric study or studies that the sponsor plans to conduct,
including trial objectives and design, age groups, relevant endpoints and statistical approach, or a justification for not including such
detailed information, and any request for a deferral of pediatric assessments or a full or partial waiver of the requirement to provide
data from pediatric studies along with supporting information. The FDA and the sponsor must reach an agreement on the PSP. A sponsor can
submit amendments to an agreed upon initial PSP at any time if changes to the pediatric plan need to be considered based on data collected
from preclinical studies, early-phase clinical trials or other clinical development programs.

The approval process is lengthy and often difficult,
and the FDA may refuse to approve an NDA if the applicable regulatory criteria are not satisfied or may require additional clinical or
other data and information. On the basis of the FDA’s evaluation of the NDA and accompanying information, including the results
of the inspection of the manufacturing facilities, the FDA may issue either an approval letter or a Complete Response Letter (“CRL”).
An approval letter authorizes commercial marketing of the product with specific prescribing information for specific indications. A CRL
indicates that the review cycle of the application is complete, and the application will not be approved in its present form. A CRL generally
outlines the deficiencies in the submission and may require substantial additional testing or information in order for the FDA to reconsider
the application. The CRL may require additional clinical or other data, additional pivotal Phase 3 clinical trial(s) and/or other significant
and time-consuming requirements related to clinical trials, nonclinical studies or manufacturing. If a CRL is issued, the applicant may
choose to either resubmit the NDA addressing all of the deficiencies identified in the letter or withdraw the application. If and when
those deficiencies have been addressed to the FDA’s satisfaction in a resubmission of the NDA, the FDA will issue an approval letter.
The FDA has committed to reviewing such resubmissions in response to an issued CRL in either two or six months depending on the type of
information included. Even with the submission of this additional information, however, the FDA ultimately may decide that the application
does not satisfy the regulatory criteria for approval.

If a product receives regulatory approval from
the FDA, the approval is limited to the conditions of use (e.g., patient population, indication) described in the application. Further,
depending on the specific risk(s) to be addressed, the FDA may require that contraindications, warnings or precautions be included in
the product labeling, require that post-approval trials, including Phase 4 clinical trials, be conducted to further assess a product’s
safety after approval, require testing and surveillance programs to monitor the product after commercialization, or impose other conditions,
including distribution and use restrictions or other risk management mechanisms under a REMS, which can materially affect the potential
market and profitability of the product. The FDA may prevent or limit further marketing of a product based on the results of post-marketing
trials or surveillance programs. After approval, some types of changes to the approved product, such as adding new indications, manufacturing
changes and additional labeling claims, are subject to further testing requirements and FDA review and approval.

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Fast Track, Priority Review, and Breakthrough Therapy Designations

A sponsor may seek approval of its drug candidate
under programs designed to accelerate the FDA’s review and approval of new drugs that meet certain criteria. Specifically, new drugs
are eligible for Fast Track designation if they are intended to treat a serious or life-threatening condition and demonstrate the potential
to address unmet medical needs for the condition. Fast Track designation provides increased opportunities for sponsor interactions with
the FDA during preclinical and clinical development, in addition to the potential for rolling review once a marketing application is filed,
meaning that the FDA may consider for review sections of the NDA on a rolling basis before the complete application is submitted, if the
sponsor provides a schedule for the submission of the sections of the application, the FDA agrees to accept the sections and determines
that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the application.
A fast track designated drug candidate may also qualify for accelerated approval (described below) or priority review, under which the
FDA sets the target date for FDA action on an NDA at six months after the FDA accepts the application for filing.

Priority review is granted when there is evidence
that the proposed product would be a significant improvement in the safety or effectiveness of the treatment, diagnosis, or prevention
of a serious condition. Significant improvement may be illustrated by evidence of increased effectiveness in the treatment of a condition,
elimination or substantial reduction of a treatment-limiting drug reaction, documented enhancement of patient compliance that may lead
to improvement in serious outcomes, or evidence of safety and effectiveness in a new subpopulation. If criteria are not met for priority
review, the application is subject to the standard FDA review period of ten months after FDA accepts the application for filing.

In addition, a sponsor may seek FDA designation
of its drug candidate as a breakthrough therapy if the drug candidate is intended, alone or in combination with one or more other drugs
or biologics, to treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the therapy
may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment
effects observed early in clinical development. Breakthrough therapy designation provides all the features of Fast Track designation in
addition to intensive guidance on an efficient development program beginning as early as Phase 1, and FDA organizational commitment to
expedited development, including involvement of senior managers and experienced review and regulatory staff in a proactive, collaborative,
cross-disciplinary review, where appropriate. A drug designated as breakthrough therapy is also eligible for accelerated approval if the
relevant criteria are met.

Even if a product qualifies for one or more of
these programs, the FDA may later decide that the product no longer meets the conditions for qualification or decide that the time period
for FDA review or approval will not be shortened. Fast track, priority review and breakthrough therapy designations do not change the
scientific or medical standards for approval or the quality of evidence necessary to support approval but may expedite the development
or approval process.

Accelerated Approval

In addition, products studied for their safety
and effectiveness in treating serious or life-threatening illnesses and that provide meaningful therapeutic benefit over existing treatments
may receive accelerated approval from the FDA and may be approved on the basis of adequate and well-controlled clinical trials establishing
that the drug product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit. The FDA may also grant
accelerated approval for such a drug or biologic when it has an effect on an intermediate clinical endpoint that can be measured earlier
than an effect on irreversible morbidity and mortality (“IMM”), and that is reasonably likely to predict an effect on IMM
or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative
treatments. As a condition of approval, the FDA may require that a sponsor of a drug receiving accelerated approval perform post-marketing
clinical trials to verify and describe the predicted effect on IMM or other clinical endpoint, and the product may be subject to expedited
withdrawal procedures. Drugs granted accelerated approval must meet the same statutory standards for safety and effectiveness as those
granted traditional approval.

For the purposes of accelerated approval, a surrogate
endpoint is a marker, such as a laboratory measurement, radiographic image, physical sign, or other measure that is thought to predict
clinical benefit, but is not itself a measure of clinical benefit. Surrogate endpoints can often be measured more easily or more rapidly
than clinical endpoints. An intermediate clinical endpoint is a measurement of a therapeutic effect that is considered reasonably likely
to predict the clinical benefit of a drug or biologic, such as an effect on IMM. The FDA has limited experience with accelerated approvals
based on intermediate clinical endpoints, but has indicated that such endpoints generally may support accelerated approval when the therapeutic
effect measured by the endpoint is not itself a clinical benefit and basis for traditional approval, if there is a basis for concluding
that the therapeutic effect is reasonably likely to predict the ultimate long-term clinical benefit of a drug.

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The accelerated approval pathway is most often
used in settings in which the course of a disease is long, and an extended period of time is required to measure the intended clinical
benefit of a drug, even if the effect on the surrogate or intermediate clinical endpoint occurs rapidly. For example, accelerated approval
has been used extensively in the development and approval of drugs for treatment of a variety of cancers in which the goal of therapy
is generally to improve survival or decrease morbidity and the duration of the typical disease course requires lengthy and sometimes large
clinical trials to demonstrate a clinical or survival benefit.

The accelerated approval pathway is usually contingent
on a sponsor’s agreement to conduct, in a diligent manner, additional post-approval confirmatory studies to verify and describe
the drug candidate’s clinical benefit. As a result, a drug candidate approved on this basis is subject to rigorous post-marketing
compliance requirements, including the completion of Phase 4 or post-approval clinical trials to confirm the effect on the clinical endpoint.
Failure to conduct required post-approval studies, or to confirm the predicted clinical benefit of the product during post-marketing studies,
would allow the FDA to withdraw approval of the product. As part of the Consolidated Appropriations Act for 2023, Congress provided FDA
additional statutory authority to mitigate potential risks to patients from continued marketing of ineffective drugs or biologics previously
granted accelerated approval. Under such act’s amendments to the FDCA, the FDA may require the sponsor of a product granted accelerated
approval to have a confirmatory trial underway prior to approval. The sponsor must also submit progress reports on a confirmatory trial
every six months until the trial is complete, and such reports are published on FDA’s website. The amendments also give FDA the
option of using expedited procedures to withdraw product approval if the sponsor’s confirmatory trial fails to verify the claimed
clinical benefits of the product.

All promotional materials for drug candidates being
considered and approved under the accelerated approval program are subject to prior review by the FDA.

Post-Approval Requirements

After approval, the manufacturer and the approved
drug product are subject to extensive continuing regulation by the FDA, which includes, among other things, obligations to manufacture
the product in accordance with cGMP, monitoring and recordkeeping activities, reporting of adverse experiences with the product, product
sampling and distribution restrictions, complying with FDA promotion and advertising requirements, which include restrictions on promoting
drugs for unapproved uses or patient populations (i.e., “off-label uses”) and limitations on industry-sponsored scientific
and educational activities. The manufacturer and its products are also subject to similar post-approval requirements by regulatory authorities
comparable to FDA in jurisdictions outside of the United States where the products are approved. Although physicians may prescribe legally
available products for off-label uses, manufacturers may not market or promote such uses. The FDA and other agencies actively enforce
the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label
uses may be subject to significant liability. If there are any modifications to the product, including changes in indications, labeling
or manufacturing processes or facilities, the applicant may be required to submit and obtain FDA approval of a new NDA or a supplement
to an NDA, which may require the applicant to develop additional data or conduct additional nonclinical studies and clinical trials. The
FDA may also place other conditions on approvals including the requirement for a REMS to assure the safe use of the product. A REMS could
include medication guides, physician communication plans or elements to assure safe use, such as restricted distribution methods, patient
registries and other risk minimization tools. Any of these limitations on approval or marketing could restrict the commercial promotion,
distribution, prescription or dispensing of products. Product approvals may be withdrawn for non-compliance with regulatory standards
or if problems occur following initial marketing.

FDA regulations require that products be manufactured
in specific approved facilities and in accordance with cGMPs. The cGMP regulations include requirements relating to organization of personnel,
buildings and facilities, equipment, control of components and drug product containers and closures, production and process controls,
packaging and labeling controls, holding and distribution, laboratory controls, records and reports and returned or salvaged products.
The manufacturing facilities for our drug candidates must meet applicable cGMP requirements to the FDA’s or comparable international
regulatory authorities’ satisfaction before any product is approved and our commercial products can be manufactured. We rely, and
expect to continue to rely, on third parties for the production of clinical and commercial quantities of our candidates in accordance
with cGMP regulations. These manufacturers must comply with cGMP regulations that require, among other things, quality control and quality
assurance, the maintenance of records and documentation and the obligation to investigate and correct any deviations from cGMP. Manufacturers
and other entities involved in the manufacture and distribution of approved drugs are required to register their establishments with the
FDA and certain state agencies and are subject to periodic prescheduled or unannounced inspections by the FDA and certain state agencies
for compliance with cGMP and other laws. Accordingly, manufacturers must continue to expend time, money and effort in the area of production
and quality control to maintain cGMP compliance. Future inspections by the FDA and other regulatory agencies may identify compliance issues
at the facilities of our contract manufacturing organizations (“CMOs”) that may disrupt production or distribution or require
substantial resources to correct. In addition, the discovery of conditions that violate these rules, including failure to conform to cGMPs,
could result in enforcement actions, and the discovery of problems with a product after approval may result in restrictions on a product,
manufacturer or holder of an approved NDA, including voluntary recall and regulatory sanctions as described below.

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Once an approval or clearance of a drug is granted, the FDA may withdraw
the approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches
the market. Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency,
or with manufacturing processes, or failure to comply with regulatory requirements, may result in mandatory revisions to the approved
labeling to add new safety information; imposition of post-market or clinical trials to assess new safety risks; or imposition of distribution
or other restrictions under a REMS program.

Other potential consequences include, among other
things:

●Restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls;

●Fines, warning letters or other enforcement-related letters, or clinical holds on post-approval clinical trials;

●Refusal of the FDA to approve pending marketing applications or supplements to approved marketing authorizations, or suspension or
revocation of product approvals;

●Product seizure or detention, or refusal to permit the import or export of products;

●Injunctions or the imposition of civil or criminal penalties;

●Consent decrees, corporate integrity agreements, debarment, or exclusion from federal healthcare programs; and/or

●Mandated modification of promotional materials and labeling and the issuance of corrective information.

In addition, the distribution of prescription pharmaceutical
products is subject to the Prescription Drug Marketing Act (“PDMA”), which regulates the distribution of drugs and drug samples
at the federal level and sets minimum standards for the registration and regulation of drug distributors by the states. Both the PDMA
and state laws limit the distribution of prescription pharmaceutical product samples and impose requirements to ensure accountability
in distribution. Most recently, the Drug Supply Chain Security Act (“DSCSA”) was enacted with the aim of building an electronic
system to identify and trace certain prescription drugs distributed in the United States. The DSCSA mandates phased-in and resource-intensive
obligations for pharmaceutical manufacturers, wholesale distributors, and dispensers over a ten-year period, which culminated in November
2023. However, the FDA announced a one-year “stabilization period” until November 2024, followed by trading partner-specific
exemptions through specified dates in 2025, to accommodate additional time that trading partners in the pharmaceutical supply chain needed
in order to fully implement DSCSA requirements for electronic drug tracing at the package level.

From time to time, new legislation and regulations
may be implemented that could significantly change the statutory provisions governing the approval, manufacturing and marketing of products
regulated by the FDA. It is often impossible to predict whether further legislative or regulatory changes will be enacted, whether FDA
regulations, guidance or interpretations will be changed or what the impact of such changes, if any, may be.

Regulation of Controlled Substances

Our drug candidates contain active substances derived
from the cannabis plant and psilocybe mushrooms (or that are synthesized versions of such substances), which are classified as controlled
substances, as defined in the CSA. The CSA and its implementing regulations establish a “closed system” of distribution for
controlled substances. The CSA imposes registration, security, recordkeeping and reporting, storage, manufacturing, distribution, labeling,
importation, exportation, disposal and other requirements under the oversight of the DEA, the federal agency responsible for regulating
controlled substances. The DEA requires those individuals or entities that manufacture, import, export, distribute, research, or dispense
controlled substances to comply with the applicable requirements to prevent the diversion of controlled substances to illicit channels
of commerce.

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The DEA categorizes controlled substances into
one of five schedules - Schedule I, II, III, IV, or V - with varying qualifications for listing in each schedule. Schedule I substances
have a high potential for abuse, have no currently “accepted medical use” in treatment in the United States and lack accepted
safety for use under medical supervision. They may be used only in federally approved research programs and may not be marketed or sold
for dispensing to patients in the United States. THC, along with other substances derived from the cannabis plant, and psilocybin are
Schedule I controlled substances under the CSA. Pharmaceutical products having a currently accepted medical use that are otherwise approved
for marketing may be listed as Schedule II, III, IV or V substances, with Schedule II substances presenting the highest potential for
abuse and physical or psychological dependence and Schedule V substances the lowest relative risk for abuse and dependence. The regulatory
requirements are more restrictive for Schedule II substances than Schedule III-V substances. For example, all Schedule II drug prescriptions
must be signed by a physician, physically presented to a pharmacist in most situations, and cannot be refilled.

Following FDA approval of a drug containing a Schedule
I controlled substance, that substance must be rescheduled as a Schedule II, III, IV or V substance before it can be marketed. For example,
products approved for medical use in the United States that contain THC, other cannabis plant extracts, or synthetic versions of such
substances must be placed in one of Schedules II-V as approval by the FDA satisfies the “acceptable medical use” requirement.
In November 2015, the Improving Regulatory Transparency for New Medical Therapies Act, which law removed uncertainty associated with timing
of the DEA rescheduling process after FDA approval, was signed into law. Specifically, the law requires the DEA to issue an “interim
final rule,” pursuant to which a manufacturer may market its product within 90 days of FDA approval. The law also preserves the
period of orphan marketing exclusivity for the full seven years such that this period only begins after DEA scheduling.

Facilities that research, manufacture, distribute,
import or export any controlled substance must register annually with the DEA. The DEA registration is specific to the particular location,
activity(ies) and controlled substances utilized. For example, separate registrations are required for importation and manufacturing activities,
and each registration authorizes the registrant to handle controlled substances within specific schedules. However, certain coincident
activities are permitted without obtaining a separate DEA registration, such as distribution of controlled substances by the registered
manufacturer that produces them.

The DEA inspects all manufacturing facilities to
review security, recordkeeping, reporting, handling and compliance with other DEA regulatory requirements prior to issuing a controlled
substance registration and periodically thereafter to ensure continued compliance. The specific security requirements vary by the type
of business activity and the schedule and quantity of controlled substances handled. The most stringent requirements apply to manufacturers
of Schedule I and Schedule II substances. Required security measures commonly include background checks on employees and physical control
of controlled substances through storage in approved vaults, safes and cages, and through use of alarm systems and surveillance cameras.
An application for a manufacturing registration as a bulk manufacturer (not a dosage form manufacturer or a repacker/relabeler) for a
Schedule I or II substance must be published in the Federal Register and remain open for 30 days to permit interested persons to submit
comments, objections, or requests for a hearing. A copy of the notice of the Federal Register publication is forwarded by the DEA to all
those registered, or applicants for registration, as bulk manufacturers of that substance.

Once registered, manufacturing facilities must
maintain records documenting the manufacture, receipt and distribution of all controlled substances. Manufacturers must submit periodic
reports to the DEA of the distribution of Schedule I and II controlled substances, Schedule III narcotic substances, and other designated
substances. Registrants must also report any controlled substance thefts or significant losses and must obtain authorization to dispose
of controlled substances. As with applications for registration as a bulk manufacturer, an application for an importer registration for
a Schedule I or II substance must also be published in the Federal Register, which remains open for 30 days for comments. Imports of Schedule
I and II controlled substances for commercial purposes are generally restricted to substances not already available from a domestic supplier
or where there is not adequate competition among domestic suppliers. In addition to an importer or exporter registration, importers and
exporters must obtain a permit for every import or export of a Schedule I or II substance a Schedule III, IV or V narcotic, a specially
designated Schedule III non-narcotic, or a Schedule IV or V narcotic controlled in Schedule I or II by the Convention on Psychotropic
Substances and submit import or export declarations for a Schedule III, IV or V non-narcotic.

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For drugs manufactured in the United States, the DEA establishes annually
an aggregate quota for the amount of substances within Schedules I and II that may be manufactured or produced in the United States based
on the DEA’s estimate of the quantity needed to meet legitimate medical, scientific, research and industrial needs. This limited
aggregate amount of cannabis or psilocybin that the DEA allows to be produced in the United States each year is allocated among individual
companies, which, in turn, must annually apply to the DEA for individual manufacturing and procurement quotas. The quotas apply equally
to the manufacturing of the API and the production of dosage forms. The DEA may adjust aggregate production quotas and individual manufacturing
or procurement quotas from time to time during the year, although the DEA has substantial discretion in whether or not to make such adjustments
for individual companies.

State governments also maintain separate controlled
substance laws and regulations, including licensing, recordkeeping, security, distribution, and dispensing requirements. State authorities,
including boards of pharmacy, regulate use of controlled substances within the state. Failure to maintain compliance with applicable requirements,
particularly as manifested in the loss or diversion of controlled substances, can result in enforcement action that could have a material
adverse effect on our business, operations and financial condition. The DEA may seek civil penalties, refuse to renew necessary registrations,
or initiate proceedings to revoke those registrations. In certain circumstances, violations could lead to criminal prosecution.

Following receipt of a scientific and medical evaluation
of marijuana from HHS recommending that the substance be moved from Schedule I to Schedule III, the DEA issued a notice of proposed rulemaking
in May 2024 to effectuate such rescheduling. The DEA scheduled a public hearing on the proposal for January 2025, but the hearing was
postponed indefinitely by the presiding administrative law judge. As of September 2025, the rulemaking appears stalled and marijuana remains
a Schedule I substance. However, President Trump has expressed interest in rescheduling marijuana and his administration is continuing
to evaluate the Schedule III proposal.

In May 2024, the DEA published a notice of proposed
rulemaking to reschedule marijuana (the cannabis plant and the various compounds, manufactures, salts, derivatives, mixtures, or preparations
from it) from Schedule I to Schedule III. Additionally, in August 2025, the DEA forwarded to HHS a citizen petition proposing that the
agencies reschedule psilocybin from Schedule I to Schedule II. After receiving the petition, HHS will conduct a scientific and medical
review of the proposed rescheduling and supporting data and, once completed, will issue a recommendation to the DEA. However, it is uncertain
whether DEA will issue a final rule to implement the rescheduling of either substance. Even if a final rule is issued in either case,
it will likely be subject to continued political opposition or possible legal challenges in federal court.

We will be subject to DEA approval to conduct our clinical trials and
manufacturing activities in the United States. All parties engaged for our projects, including but not limited to formulation development,
manufacturing, preclinical and clinical research, involving controlled substances in the United States must have the appropriate registrations
with and permits from the DEA as well as licenses from applicable state authorities. We may also decide to develop, manufacture or commercialize
our drug candidates in additional countries. As a result, we will be subject to controlled substance laws and regulations from the Australian
Therapeutic Goods Administration (“TGA”), Health Canada’s Office of Controlled Substances, the Drugs & Firearms
Unit (Home Office) of the National Drug Control System in the United Kingdom, and from other regulatory agencies in other countries where
we develop, manufacture or commercialize, if approved, each drug asset in the future.

Patent Term Restoration

Depending upon the timing, duration and specifics
of FDA approval of our drug candidates, some of our United States patents may be eligible for limited patent term extension under the
Drug Price Competition and Patent Term Restoration Act, informally known as the Hatch-Waxman Act. The Hatch-Waxman Act permits a patent
restoration term of up to five years as compensation for patent term lost during product development and the FDA regulatory review process.
However, patent term restoration cannot extend the remaining term of a patent beyond a total of 14 years from the drug candidate’s
approval date. The patent term restoration period is generally one half of the time between the effective date of an IND and the submission
date of an NDA, plus the time between the submission date of the NDA and the approval of that application, except that the review period
is reduced by any time during which the applicant failed to exercise due diligence. Only one patent applicable to an approved drug candidate
is eligible for the extension and the application for extension must be made prior to expiration of the patent. The USPTO, in consultation
with the FDA, reviews and approves the application for any patent term extension or restoration. In the future, we intend to apply for
restorations of patent term for some of our currently owned or licensed patents to add patent life beyond their current expiration date,
depending on the expected length of clinical trials and other factors involved in the submission of the relevant NDA.

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Abbreviated NDAs for Generic Drugs

In 1984, with passage of the Hatch-Waxman Act,
which established an abbreviated regulatory scheme authorizing the FDA to approve generic drugs based on an innovator or “reference”
product, Congress also enacted Section 505(b)(2) of the FDCA, which provides a hybrid pathway combining features of a traditional NDA
and a generic drug application. To obtain approval of a generic drug, an applicant must submit an Abbreviated New Drug Application (“ANDA”)
to the agency. In support of such applications, a generic manufacturer may rely on the preclinical and clinical testing previously conducted
for a drug product previously approved under an NDA, known as the reference listed drug (“RLD”).

Specifically, in order for an ANDA to be approved,
the FDA must find that the generic version is identical to the RLD with respect to the active ingredients, the route of administration,
the dosage form, and the strength of the drug. At the same time, the FDA must also determine that the generic drug is “bioequivalent”
to the innovator drug. Under the statute, a generic drug is bioequivalent to an RLD if “the rate and extent of absorption
of the drug do not show a significant difference from the rate and extent of absorption of the listed drug.”

Upon approval of an ANDA, the FDA indicates whether
the generic product is “therapeutically equivalent” to the RLD in its publication Approved Drug Products with Therapeutic
Equivalence Evaluations, also referred to as the Orange Book. Clinicians and pharmacists consider a therapeutic equivalent generic drug
to be fully substitutable for the RLD. In addition, by operation of certain state laws and numerous health insurance programs, the FDA’s
designation of therapeutic equivalence often results in substitution of the generic drug without the knowledge or consent of either the
prescribing clinicians or patient.

In contrast, Section 505(b)(2) permits the filing
of an NDA where at least some of the information required for approval comes from studies not conducted by or for the applicant and for
which the applicant has not obtained a right of reference. Section 505(b)(2) NDAs may provide an alternate path to FDA approval for new
or improved formulations or new uses of previously approved products; for example, an applicant may be seeking approval to market a previously
approved drug for new indications or for a new patient population that would require new clinical data to demonstrate safety or effectiveness.
A Section 505(b)(2) applicant may eliminate the need to conduct certain preclinical or clinical studies, if it can establish that reliance
on studies conducted for a previously approved product is scientifically appropriate. Unlike the ANDA pathway used by developers of bioequivalent
versions of innovator drugs, which does not allow applicants to submit new clinical data other than bioavailability or bioequivalence
data, the 505(b)(2) regulatory pathway does not preclude the possibility that a follow-on applicant would need to conduct additional clinical
trials or nonclinical studies. The FDA may then approve the new product for all or some of the label indications for which the RLD has
been approved, or for any new indication sought by the Section 505(b)(2) applicant as applicable.

In addition, under the Hatch-Waxman Amendments,
the FDA may not approve an ANDA or 505(b)(2) NDA until any applicable period of non-patent exclusivity for the RLD has expired. These
market exclusivity provisions under the FDCA also can delay the submission or the approval of certain applications. The FDCA provides
a period of five years of non-patent data exclusivity for a new drug containing a new chemical entity (“NCE”). For the purposes
of this provision, an NCE, is a drug that contains no active moiety that has previously been approved by the FDA in any other NDA. An
active moiety is the molecule or ion responsible for the physiological or pharmacological action of the drug substance. In cases where
such NCE exclusivity has been granted, an ANDA or 505(b)(2) NDA may not be filed with the FDA until the expiration of five years unless
the submission is accompanied by a Paragraph IV certification (described below), in which case the applicant may submit its application
four years following the original product approval.

The FDCA also provides for a period of three years
of exclusivity for an NDA, 505(b)(2) NDA or supplement thereto if one or more new clinical investigations, other than bioavailability
or bioequivalence studies, that were conducted by or for the applicant are deemed by the FDA to be essential to the approval of the application.
This three-year exclusivity period often protects changes to a previously approved drug product, such as a new dosage form, route of administration,
combination or indication. The three-year exclusivity covers only the conditions of use associated with the new clinical investigations
and does not prohibit the FDA from approving follow-on applications for drugs containing the original active agent. Five-year and three-year
exclusivity also will not delay the submission or approval of a traditional NDA filed under Section 505(b)(1) of the FDCA. However, an
applicant submitting a traditional NDA would be required to either conduct or obtain a right of reference to all of the preclinical studies
and adequate and well-controlled clinical trials necessary to demonstrate safety and effectiveness.

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Hatch-Waxman Patent Certification and the 30-Month
Stay

Upon approval of an NDA or a supplement thereto,
NDA sponsors are required to list with the FDA each patent with claims that cover the applicant’s product or an approved method
of using the product. Each of the patents listed by the NDA sponsor is published in the Orange Book. When an ANDA applicant files its
application with the FDA, the applicant is required to certify to the FDA concerning any patents listed for the reference product in the
Orange Book, except for patents covering methods of use for which the ANDA applicant is not seeking approval. To the extent that the Section
505(b)(2) NDA applicant is relying on studies conducted for an already approved product, the applicant is required to certify to the FDA
concerning any patents listed for the approved product in the Orange Book to the same extent that an ANDA applicant would.

Specifically, the applicant must certify with respect
to each patent that:

●the required patent information has not been filed by the original applicant;

●the listed patent has expired;

●the listed patent has not expired, but will expire on a particular date and approval is sought after patent expiration; or

●the listed patent is invalid, unenforceable or will not be infringed by the manufacture, use or sale of the new product.

If a Paragraph I or II certification is filed,
the FDA may make approval of the application effective immediately upon completion of its review. If a Paragraph III certification is
filed, the approval may be made effective on the patent expiration date specified in the application, although a tentative approval may
be issued before that time. If an application contains a Paragraph IV certification, a series of events will be triggered, the outcome
of which will determine the effective date of approval of the ANDA or 505(b)(2) application.

If the follow-on applicant has provided a Paragraph
IV certification to the FDA, the applicant must also send notice of the Paragraph IV certification to the NDA and patent holders once
the follow-on application in question has been accepted for filing by the FDA. The NDA and patent holders may then initiate a patent infringement
lawsuit in response to the notice of the Paragraph IV certification. The filing of a patent infringement lawsuit within 45 days after
the receipt of a Paragraph IV certification automatically prevents the FDA from approving the ANDA or 505(b)(2) NDA until the earlier
of 30 months after the receipt of the Paragraph IV notice, expiration of the patent, or a decision in the infringement case that is favorable
to the ANDA or 505(b)(2) applicant. Alternatively, if the listed patent holder does not file a patent infringement lawsuit within the
required 45-day period, the follow-on applicant’s ANDA or 505(b)(2) NDA will not be subject to the 30-month stay.

Other U.S. Healthcare Laws and Regulations

If our drug candidates are approved in the United
States, we will have to comply with various U.S. federal and state laws, rules and regulations pertaining to healthcare fraud and abuse,
including anti-kickback laws and physician self-referral laws, rules and regulations. Violations of the fraud and abuse laws are punishable
by criminal and civil sanctions, including, in some instances, exclusion from participation in federal and state healthcare programs,
including Medicare and Medicaid. These laws include:

●The federal Anti-Kickback Statute (the “AKS”) prohibits, among other things, persons from knowingly and willfully soliciting,
offering, receiving or paying remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an
individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made, in whole or in part,
under a federal healthcare program such as Medicare and Medicaid. A person or entity does not need to have actual knowledge of the AKS
or specific intent to violate it to have committed a violation. In addition, the government may assert that a claim including items or
services resulting from a violation of the AKS constitutes a false or fraudulent claim for purposes of the FCA or federal civil money
penalties statute;

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●The federal civil and criminal false claims laws and civil monetary penalty laws, including the federal False Claims Act, which prohibit,
among other things, individuals or entities from knowingly presenting, or causing to be presented, false or fraudulent claims for payment
to, or approval by Medicare, Medicaid, or other federal healthcare programs, knowingly making, using or causing to be made or used a false
record or statement material to a false or fraudulent claim or an obligation to pay or transmit money to the federal government, or knowingly
concealing or knowingly and improperly avoiding or decreasing or concealing an obligation to pay money to the federal government. Manufacturers
can be held liable under the FCA even when they do not submit claims directly to government payers if they are deemed to “cause”
the submission of false or fraudulent claims. The FCA also permits a private individual acting as a “whistleblower” to bring
actions on behalf of the federal government alleging violations of the FCA and to share in any monetary recovery;

●The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) imposes criminal and civil liability for executing
a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;

●HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, and its implementing regulations, also
imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually
identifiable health information;

●The federal transparency requirements under the Physician Payments Sunshine Act require manufacturers of FDA-approved drugs, devices,
biologics and medical supplies covered by Medicare or Medicaid to report, on an annual basis, to the Centers for Medicare and Medicaid
Services (“CMS”) information related to payments and other transfers of value to physicians, certain advanced non-physician
healthcare practitioners, and teaching hospitals or to entities or individuals at the request of, or designated on behalf of, such physicians,
non-physician healthcare practitioners, and teaching hospitals as well as certain ownership and investment interests held by physicians
and their immediate family members; and

●Analogous state and international laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing
arrangements and claims involving healthcare items or services reimbursed by nongovernmental third-party payors, including private insurers.

The majority of state governments have statutes
or regulations similar to the aforementioned federal laws, some of which are broader in scope and apply to items and services reimbursed
under Medicaid and other state programs, or, in several states, apply regardless of the payor. Some state laws require pharmaceutical
companies to comply with the pharmaceutical industry’s voluntary compliance guidelines, or the relevant compliance guidance promulgated
by the federal government, in addition to requiring drug manufacturers to report information related to payments to physicians and other
healthcare providers or marketing expenditures to the extent that those laws impose requirements that are more stringent than the Physician
Payments Sunshine Act. State and international laws also govern the privacy and security of health information in some circumstances,
many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.

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Due to the breadth of these laws and the narrowness of their exceptions
and safe harbors, it is possible that business activities can be subject to challenge under one or more of such laws. The scope and enforcement
of each of these laws is uncertain and subject to rapid change in the current environment of healthcare reform, especially in light of
the lack of applicable precedent and regulations. Federal and state enforcement bodies have recently increased their scrutiny of interactions
between healthcare companies and healthcare providers, which has led to a number of investigations, prosecutions, convictions and settlements
in the healthcare industry.

Ensuring that business arrangements with third
parties comply with applicable healthcare laws and regulations is costly and time consuming. If business operations are found to be in
violation of any of the laws described above or any other applicable governmental regulations a pharmaceutical manufacturer may be subject
to penalties, including civil, criminal and administrative penalties, damages, fines, disgorgement, individual imprisonment, exclusion
from governmental funded healthcare programs, such as Medicare and Medicaid, contractual damages, reputational harm, diminished profits
and future earnings, additional reporting obligations and oversight if subject to a corporate integrity agreement or other agreement to
resolve allegations of non-compliance with these laws, and curtailment or restructuring of operations, any of which could adversely affect
a pharmaceutical manufacturer’s ability to operate its business and the results of its operations.

Data Privacy and Security in the United States

We are subject to laws
and regulations governing data privacy and the protection of personal information including health information in the United States. The
legislative and regulatory landscape for privacy and data protection continues to evolve, and there has been an increasing focus on privacy
and data protection issues which will continue to affect our business. In the United States, we may be subject to state security breach
notification laws, state laws protecting the privacy of health and personal information and federal and state consumer protections laws
that regulate the collection, use, disclosure and transmission of personal information. These laws overlap and often conflict and each
of these laws is subject to varying interpretations by courts and government agencies, creating complex compliance issues. If we fail
to comply with applicable laws and regulations, we could be subject to penalties or sanctions, including criminal penalties. Our customers
and research partners must comply with laws governing the privacy and security of health information, including HIPAA and state health
information privacy laws. If we knowingly obtain health information that is protected under HIPAA, called “protected health information,”
our customers or research collaborators may be subject to enforcement, and we may have direct liability for the unlawful receipt of protected
health information or for aiding and abetting a HIPAA violation.

State laws protecting
health and personal information are becoming increasingly stringent. For example, the California Confidentiality of Medical Information
Act imposes restrictive requirements regulating the use and disclosure of health information and other personally identifiable information.
The California Consumer Privacy Act (“CCPA”) mirrors a number of the key provisions of the General Data Protection Regulation
(“GDPR”) described below. The CCPA establishes a new privacy framework for covered businesses by creating an expanded definition
of personal information, establishing new data privacy rights for consumers in the State of California, imposing special rules on the
collection of consumer data from minors, and creating a new and potentially severe statutory damages framework for violations of the CCPA
and for businesses that fail to implement reasonable security procedures and practices to prevent data breaches. The California Consumer
Rights Act (“CPRA”) became effective on January 1, 2023, strengthening elements of the CCPA. Since passage of the CCPA, several
other states (e.g., Connecticut, Colorado, Virginia, Delaware, Florida, Iowa, Montana, Oregon, Tennessee, Texas and Utah) have also enacted
comprehensive consumer privacy laws that include key differences from California’s law, further complicating compliance by industry
and other stakeholders. Other states in the United States are considering privacy laws similar to the CCPA.

International Regulation

In addition to regulations in the United States,
we are subject to a variety of international regulations governing clinical trials and the commercial sales and distribution of our drug
candidates. Whether or not we obtain FDA approval for a drug product, we must obtain approval of such product by the comparable regulatory
authorities of international countries before we can commence clinical trials or marketing of the product in those countries. The approval
process varies from country to country and the time may be longer or shorter than that required for FDA approval. In addition, the requirements
governing the conduct of clinical trials vary greatly from country to country.

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European Union and United Kingdom

In the European Economic Area (“EEA”),
which is comprised of the Member States of the European Union plus Norway, Iceland and Liechtenstein, medicinal products can only be commercialized
after obtaining marketing authorization from the European Medicines Agency (“EMA”). Under EU regulatory systems, we must submit
and obtain authorization for a clinical trial application in each member state in which we intend to conduct a clinical trial. When conducting
clinical trials in the European Union, we must adhere to the provisions of the European Union Clinical Trials Directive (Directive 2001/20/EC)
and the laws and regulations of the EU Member States implementing them. These provisions require, among other things, that the prior authorization
of an Ethics Committee and the competent Member State authority is obtained before commencing the clinical trial. In 2014, the new Clinical
Trials Regulation, (EU) No 536/2014, Clinical Trials Regulation, was adopted and it became effective on January 31, 2022. The Clinical
Trials Regulation is directly applicable in all of the EU Member States, as it repealed the Clinical Trials Directive 2001/20/EC. The
extent to which ongoing clinical trials will be governed by the Clinical Trials Regulation depends on when the Clinical Trials Regulation
became applicable and on the duration of the individual clinical trial. If a clinical trial continues for more than three years from the
day on which the Clinical Trials Regulation became applicable (i.e., beyond January 30, 2025), the Clinical Trials Regulation will at
that time begin to apply to the clinical trial.

The Clinical Trials Regulation aims to simplify
and streamline the approval of clinical trials in the European Union. The main characteristics of the regulation include: a streamlined
application procedure via a single-entry point, the “EU portal” or Clinical Trial Information System (“CTIS”);
a single set of documents to be prepared and submitted for the application as well as simplified reporting procedures for clinical trial
sponsors; and a harmonized procedure for the assessment of applications for clinical trials, which is divided in two parts. Part I is
assessed by the competent authorities of all EU Member States in which an application for authorization of a clinical trial has been submitted
(Member States concerned). Part II is assessed separately by each Member State concerned. Strict deadlines have been established for the
assessment of clinical trial applications. The role of the relevant ethics committees in the assessment procedure will continue to be
governed by the national law of the concerned EU Member State. However, overall related timelines will be defined by the Clinical Trials
Regulation. Use of the CTIS became mandatory for new clinical trial application submissions as of February 1, 2023.

After we have completed our clinical trials, we must obtain marketing
authorization before we can market our drug products in the European Union. We may submit Marketing Authorization Applications (“MAA”)
under the centralized procedure or one of the national authorization procedures.

The EMA is a body of the European Union located
in Amsterdam. The EMA is responsible for the scientific evaluation of medicines developed by pharmaceutical companies for use in the European
Union. The EMA is involved in the scientific evaluation of medicines that fall within the scope of the centralized procedure. Like the
FDA, there is a harmonization between regulators and the EMA may inspect and audit the development facilities, planned production facilities,
clinical trial sites and laboratory facilities. Additionally, after the product is approved and marketed, the EMA uses various mechanisms
for assuring that firms adhere to the terms and conditions of approval described in the application and that the product is manufactured
in a consistent and controlled manner.

Centralized Procedure

The centralized procedure provides for the grant
of a single marketing authorization by the European Commission, through the EMA, that is valid throughout the EEA. This marketing authorization
process is compulsory for medicines produced by specified biotechnological processes, products designated as orphan medicinal products,
advanced-therapy medicines (such as gene-therapy, somatic cell-therapy or tissue-engineered medicines) and products with a new active
substance indicated for the treatment of specified diseases, such as HIV/AIDS, cancer, diabetes, neurodegenerative disorders or autoimmune
diseases and other immune dysfunctions and viral diseases. For those products for which the use of the centralized procedure is not mandatory,
applicants may elect to use the centralized procedure where either the product contains a new active substance indicated for the treatment
of diseases other than those on the mandatory list, or where the applicant can show that the product constitutes a significant therapeutic,
scientific or technical innovation, or for which a centralized process is in the interest of public health.

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Under the centralized procedure, the Committee
for Medicinal Products for Human Use (the “CHMP”), which is the EMA’s committee that is responsible for human medicines,
established at the EMA is responsible for conducting the assessment of whether a medicine meets the required quality, safety and efficacy
requirements, and whether it has a positive benefit/risk profile. The maximum timeframe for the evaluation of a MAA is 210 days from the
receipt of a valid MAA, excluding clock stops when additional information or written or oral explanation is to be provided by the applicant
in response to questions of the CHMP. Clock stops may extend the timeframe of evaluation of a MAA considerably beyond 210 days. Where
the CHMP gives a positive opinion, it provides the opinion together with supporting documentation to the European Commission, which makes
the final decision to grant a marketing authorization. Accelerated evaluation may be granted by the CHMP in exceptional cases, when a
medicinal product is expected to be of major interest to the public health and, in particular, from the viewpoint of therapeutic innovation.
If the CHMP accepts such a request, the timeframe for assessment is 150 days (excluding clock stops), but it is possible that the CHMP
may revert to the standard review timeframe for the centralized procedure if it determines that the MAA is no longer appropriate to conduct
an accelerated assessment.

National Authorization Procedures

There are also two other possible routes to authorize
medicinal products in several EU countries, which are available for investigational medicinal products that fall outside the scope of
the centralized procedure:

●Decentralized procedure. Using the decentralized procedure, an applicant may apply for simultaneous authorization in more than one
EU country of medicinal products that have not yet been authorized in any EU country and that do not fall within the mandatory scope of
the centralized procedure.

●Mutual recognition procedure. In the mutual recognition procedure, a medicine is first authorized in one EU Member State, in accordance
with the national procedures of that country. Following this, further marketing authorizations can be sought from other EU countries in
a procedure whereby the countries concerned agree to recognize the validity of the original, national marketing authorization.

Under the above-described procedures, before granting
the marketing authorization, the EMA or the competent authorities of the Member States of the EEA make an assessment of the risk-benefit
balance of the product on the basis of scientific criteria concerning its quality, safety and efficacy.

PRIME Scheme

EMA offers a scheme that is intended to reinforce
early dialogue with, and regulatory support from, EMA in order to stimulate innovation, optimize development and enable accelerated assessment
of PRIority MEdicines (“PRIME”). It is intended to build upon the scientific advice scheme and accelerated assessment procedure
offered by EMA. The program is voluntary and eligibility criteria must be met for a medicine to qualify for PRIME.

The PRIME scheme is open to medicines under development
and for which the applicant intends to apply for an initial marketing authorization application through the centralized procedure. Eligible
products must target conditions for which there is an unmet medical need (there is no satisfactory method of diagnosis, prevention or
treatment in the European Union or, if there is, the new medicine will bring a major therapeutic advantage) and they must demonstrate
the potential to address the unmet medical need by introducing new methods or therapy or improving existing ones. Applicants will typically
be at the exploratory clinical trial phase of development and will have preliminary clinical evidence in patients to demonstrate the promising
activity of the medicine and its potential to address to a significant extent an unmet medical need. In exceptional cases, applicants
from the academic sector or small and medium sized enterprises may submit an eligibility request at an earlier stage of development if
compelling nonclinical data in a relevant model provide early evidence of promising activity, and first in man studies indicate adequate
exposure for the desired pharmacotherapeutic effects and tolerability.

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If a medicine is selected for the PRIME scheme,
EMA:

●appoints a rapporteur from the CHMP or from the Committee for Advanced Therapies to provide continuous support and to build up knowledge
of the medicine in advance of the filing of a marketing authorization application;

●issues guidance on the applicant’s overall development plan and regulatory strategy;

●organizes a kick-off meeting with the rapporteur and experts from relevant EMA committees and working groups;

●provides a dedicated EMA contact person; and

●provides scientific advice at key development milestones, involving additional stakeholders, such as health technology assessment
bodies and patients, as needed.

Medicines that are selected for PRIME designation
are also expected to benefit from EMA’s accelerated assessment procedure at the time of application for marketing authorization.
Where, during the course of development, a medicine no longer meets the eligibility criteria, support under the PRIME scheme may be withdrawn.

Regulatory Data Protection in the European Union

In the EEA, innovative medicinal products approved
on the basis of a complete independent data package qualify for eight years of data exclusivity upon grant of a marketing authorization
and an additional two years of market exclusivity pursuant to Regulation (EC) No. 726/2004, as amended, and Directive 2001/83/EC, as amended.
Data exclusivity prevents generic and biosimilar applicants from referencing the innovator’s preclinical and clinical trial data
contained in the dossier of the reference product when applying for a marketing authorization for a period of eight years from the date
on which the reference product was first authorized in the EEA. During the additional two-year period of market exclusivity, a generic
or biosimilar marketing authorization application can be submitted, and the innovator’s data may be referenced, but no generic or
biosimilar medicinal product can be marketed until the expiration of the market exclusivity period. The overall 10-year period will be
extended to a maximum of 11 years if, during the first eight years of those 10 years, the marketing authorization holder obtains an authorization
for one or more new therapeutic indications which, during the scientific evaluation prior to authorization, is held to bring a significant
clinical benefit in comparison with existing therapies. Even if a compound is considered to be an innovative medicinal product so that
the innovator gains the prescribed period of data exclusivity, another company may market another version of the product if such company
obtained marketing authorization based on a MAA with a completely independent data package of pharmaceutical tests, preclinical tests
and clinical trials.

Periods of Authorization and Renewals

A marketing authorization is valid for five years,
in principle, and it may be renewed after five years on the basis of a re-evaluation of the risk benefit balance by the EMA or by the
competent authority of the authorizing Member State. To that end, the marketing authorization holder must provide the EMA or the competent
authority with a consolidated version of the file in respect of quality, safety and efficacy, including all variations introduced since
the marketing authorization was granted, at least nine months before the marketing authorization ceases to be valid. Once renewed, the
marketing authorization is valid for an unlimited period, unless the European Commission or the competent authority decides on justified
grounds relating to pharmacovigilance, to proceed with one additional five-year renewal period. Any authorization that is not followed
by the placement of the product on the EEA market (in the case of the centralized procedure) or on the market of the authorizing member
state within three years after authorization ceases to be valid.

Patent Term Extension

In order to compensate the patentee for delays
in obtaining a marketing authorization for a patented product, a supplementary certificate (“SPC”), may be granted extending
the exclusivity period for that specific product by up to five years. Applications for SPCs must be made to the relevant patent office
in each EU Member State and the granted certificates are valid only in the granting Member State. An application must be made by the patent
owner within six months of the first marketing authorization being granted in the European Union (assuming the patent in question has
not expired, lapsed or been revoked) or within six months of the grant of the patent (if the marketing authorization is granted first).
In the context of SPCs, the term “product” means the active ingredient or combination of active ingredients for a medicinal
product, and the term “patent” means a patent protecting such a product or a new manufacturing process or application for
it. The duration of an SPC is calculated as the difference between the patent’s filing date and the date of the first marketing
authorization, minus five years, subject to a maximum term of five years.

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A six-month pediatric extension of an SPC may be
obtained where the patentee has carried out an agreed pediatric investigation plan, the authorized product information includes information
on the results of the studies and the product is authorized in all EU Member States.

Controlled Drugs Classification

The position in the member states of the European
Union is not harmonized. Member states have implemented the relevant United Nations Conventions (the Single Convention on Narcotic Drugs
1961 and the Convention on Psychotropic Substances 1971) into their national legislation, which has led to differences in how controlled
substances are regulated in different countries of the European Union. It is therefore important to determine at a national level whether
a substance is controlled and to comply with the applicable legal requirements.

Regulatory Requirements After Marketing Authorization

Following approval, the holder of the marketing
authorization is required to comply with a range of requirements applicable to the manufacturing, marketing, promotion and sale of the
medicinal product.

These include compliance with the European Union’s
stringent pharmacovigilance or safety reporting rules, pursuant to which post-authorization studies and additional monitoring obligations
can be imposed. The holder of a marketing authorization must establish and maintain a pharmacovigilance system and appoint an individual
qualified person for pharmacovigilance, who is responsible for oversight of that system. Key obligations include expedited reporting of
suspected serious adverse reactions and submission of periodic safety update reports (“PSURs”).

In addition, all new MAAs must include a risk management
plan, or RMP, describing the risk management system that the company will put in place and documenting measures to prevent or minimize
the risks associated with the product. The regulatory authorities may also impose specific obligations as a condition of the marketing
authorization. Such risk-minimization measures or post-authorization obligations may include additional safety monitoring, more frequent
submission of PSURs, or the conduct of additional clinical trials or post-authorization safety studies. RMPs and PSURs are routinely available
to third parties requesting access, subject to limited redactions.

Furthermore, the manufacturing of authorized products,
for which a separate manufacturer’s license is mandatory, must also be conducted in strict compliance with applicable cGMP requirements,
which mandate the methods, facilities and controls used in manufacturing, processing and packing of products to assure their safety and
identity.

Finally, the marketing and promotion of authorized
products, including industry-sponsored continuing medical education and advertising directed toward the prescribers of products, are strictly
regulated in the European Union under Directive 2001/83/EC, as amended. The advertising of prescription-only medicines to the general
public is not permitted in the European Union, or in the United Kingdom under the Human Medicines Regulations 2021. Although general requirements
for advertising and promotion of medicinal products are established under EU Directive 2001/83/EC as amended, the details are governed
by regulations in each European Union member state (as well as Iceland, Norway and Liechtenstein) and can differ from one country to another.

United Kingdom

As of January 1, 2021, European Union law no longer
directly applies in the United Kingdom. The United Kingdom has adopted existing European Union medicines regulation as standalone United
Kingdom legislation with some amendments to reflect procedural and other requirements with respect to marketing authorizations and other
regulatory provisions.

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The MHRA, is responsible for regulating the United
Kingdom medicinal products market (Great Britain and Northern Ireland). An MHRA authorization must be obtained for each medicine to be
marketed in the regions that comprise the United Kingdom. On January 1, 2021, all European Union marketing authorizations were converted
to United Kingdom marketing authorizations subject to a manufacturer opt-out. The United Kingdom has introduced separate, specific processes
for regulatory submissions and medicinal product marketing authorization, and MHRA guidance states that the United Kingdom will have the
power to take into account marketing authorizations made under the European Union decentralized and mutual recognition procedures. On
January 1, 2024, the MHRA launched the International Recognition Procedure (“IRP”), which provides for an expedited authorization
procedure for products that have received positive marketing authorization decisions from trusted partner agencies, such as the EMA or
the FDA. There are two available routes for assessment and recognition under the IRP:

●Recognition Route A - 60 days from validation of submission

oApplication must be based on a Reference Regulatory (“RR”), marketing authorization within the previous two years

oAny significant differences from the quality dossier approved by the RR marketing authorization requires assessment under Recognition
Route

oEvidence of cGMP compliance for manufacturing sites should be provided with submission

oNone of the Recognition Route B criteria are met

●Recognition Route B - 110 days from validation of submission with one planned clock stop (up to 60 days) at day 70 to allow applicant
to respond to issues identified during review

oApplication must be based on a RR marketing authorization within the previous 10 years

oCriteria requiring Recognition Route B include, among other things:

The RR marketing authorization granted a conditional or exceptional
circumstances marketing authorization

Additional manufacturing sites included in the application
were not assessed by the RR marketing authorization or a manufacturing site is not cGMP certified

There are substantial changes to the manufacturing process
compared to the process approved by the RR marketing authorization

Certain product types (e.g., advanced therapy medicinal products,
orphan medicines, over-the-counter medicines)

A RMP was not assessed under the RR marketing authorization

The RR marketing authorization required one or more post-authorization
safety studies for the product

A companion diagnostic is necessary for correct use of the
product

United Kingdom medicines legislation is subject
to future regulatory change under the Medicines and Medical Devices Act 2021. This act sets out a framework for the adoption of medicines
regulation.

Different rules apply in Northern Ireland following
implementation of the Northern Ireland Protocol, under which European Union central marketing applications continue to apply there. However,
in March 2023, the United Kingdom government and the European Commission reached agreement on a regulatory framework to replace the Northern
Ireland Protocol, referred to as the Windsor Framework. Effective as of January 1, 2025, the Windsor Framework introduced new rules for
the regulation of pharmaceutical products in the United Kingdom. Specifically, the MHRA is responsible for approving all medicines intended
to be marketed in the United Kingdom (including Northern Ireland), and the EMA is no longer involved in approving medicines intended for
sale in Northern Ireland.

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The Trade and Cooperation Agreement, which sets
forth a framework for partnership between the European Union and the United Kingdom, became effective as of January 1, 2021. The Trade
and Cooperation Agreement between the European Union and the United Kingdom contains an Annex in relation to medicinal products with the
objective of facilitating availability of medicines, promotion of public health and consumer protection in respect of medicinal products.
The Annex provides for mutual recognition of cGMP inspections and certificates, meaning that manufacturing facilities do not need to undergo
duplicate inspections for the two markets. The Annex establishes a Working Group on Medicinal Products to deal with matters under the
Trade and Cooperation Agreement, facilitate co-operation and for the carrying out of technical discussions. It is expected that further
bilateral discussions will continue with respect to regulatory areas not the subject of the Trade and Cooperation Agreement, including
pharmacovigilance. The Trade and Cooperation Agreement also does not include reciprocal arrangements for the recognition of batch testing
certification. However, the United Kingdom has listed approved countries, including the EEA which will enable United Kingdom importers
and wholesales to recognize certain certification and regulatory standards. The European Commission has not adopted such recognition procedures.

It is expected that the establishment of a separate
United Kingdom authorization system, albeit with transitional recognition procedures in the United Kingdom, will lead to additional regulatory
costs. In addition, additional regulatory costs may be incurred with respect to the lack of mutual recognition of batch testing and related
regulatory measures.

Data Privacy and Security in the European
Union and the United Kingdom

The collection, use, disclosure, transfer, or other
processing of personal data regarding individuals in the European Union, including personal health data, is subject to the European Union’s
GDPR, which became effective on May 25, 2018. The GDPR is wide-ranging in scope and imposes numerous requirements on companies that process
personal data, including requirements relating to processing health and other sensitive data, obtaining consent of the individuals to
whom the personal data relates, providing information to individuals regarding data processing activities, implementing safeguards to
protect the security and confidentiality of personal data, providing notification of data breaches, and taking certain measures when engaging
third-party processors. The GDPR also imposes strict rules on the transfer of personal data to countries outside the European Union and
permits data protection authorities to impose large penalties for violations of the GDPR, including potential fines of up to €20
million or 4% of annual global revenues, whichever is greater. The GDPR also confers a private right of action on data subjects and consumer
associations to lodge complaints with supervisory authorities, seek judicial remedies, and obtain compensation for damages resulting from
violations of the GDPR. Compliance with the GDPR will be a rigorous and time-intensive process that may increase the cost of doing business
or require companies to change their business practices to ensure full compliance.

In July 2023, the European Commission adopted an
adequacy decision for a new mechanism for transferring data from the European Union to the United States - the EU-US Data Privacy Framework,
which provides individuals in the European Union with several new rights, including the right to obtain access to their data, or obtain
correction or deletion of incorrect or unlawfully handled data. The adequacy decision followed the signing of an executive order introducing
new binding safeguards to address the points raised by the Court of Justice of the European Union (“CJEU”) in its decision
on a case known as Schrems II, which invalidated the previous EU-US Privacy Shield. Notably, the new obligations were geared to
ensure that data can be accessed by U.S. intelligence agencies only to the extent necessary and proportionate and to establish an independent
and impartial redress mechanism to handle complaints from Europeans concerning the collection of their data for national security purposes.
The European Commission will continually review developments in the United States along with its adequacy decision. Adequacy decisions
can be adapted or even withdrawn in the event of developments affecting the level of protection in the applicable jurisdiction. Future
actions of European Union data protection authorities are difficult to predict. Some customers or other service providers may respond
to these evolving laws and regulations by asking us to make certain privacy or data-related contractual commitments that we are unable
or unwilling to make. This could lead to the loss of current or prospective customers or other business relationships.

Following the United Kingdom’s withdrawal
from the European Union, the GDPR has been implemented in the United Kingdom (as the “UK GDPR”). The UK GDPR sits alongside
the amended United Kingdom Data Protection Act 2018 which implements certain derogations in the EU GDPR into United Kingdom law. Under
the UK GDPR, companies not established in the United Kingdom but who process personal data in relation to the offering of goods or services
to individuals in the United Kingdom, or to monitor their behavior will be subject to the UK GDPR - the requirements of which are (at
this time) largely aligned with those under the EU GDPR and as such, may lead to similar compliance and operational costs with potential
fines of up to £17.5 million or 4% of annual global revenues. On June 28, 2021, the European Commission issued a decision that the
United Kingdom ensures an adequate level of protection for personal data transferred under the EU GDPR from the European Union to the
United Kingdom. In June of 2021, the European Commission issued a decision, which will sunset on June 27, 2025 without further action,
that the United Kingdom ensures an adequate level of protection for personal data transferred under the EU GDPR from the EU to the United
Kingdom. The Parliament of the United Kingdom is currently considering the Data Protection and Digital Information Bill to harmonize the
2018 Data Protection Act, UK GDPR, and the Privacy and Electronic Communications Regulations under one legislative framework.

Australia

In Australia, the relevant regulatory body responsible
for the pharmaceutical industry is the TGA. As with the EMA and FDA there is a harmonization and collaboration between regulatory authorities.
The TGA requires notification of all clinical trials via an electronic submission of a Clinical Trial Notification prior to commencing
the clinical trial.

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Third-Party Payer Coverage and Reimbursement

Although our drug candidates have not been commercialized
for any indication, if they are approved for marketing, the commercial success of our drug candidates will depend, in part, upon the availability
of coverage and reimbursement from third-party payers at the federal, state and private levels.

In the United States and internationally, sales
of any product that we market in the future, and our ability to generate revenues from such sales, are dependent, in significant part,
on the availability of adequate coverage and reimbursement from third-party payors, such as government healthcare programs, such as Medicare
and Medicaid, managed care providers, private insurance plans and other organizations.

Third-party payors are increasingly challenging
the price of medical products and services and have implemented cost-cutting and reimbursement initiatives and likely will continue to
do so in the future. In addition, significant uncertainty exists as to the reimbursement status of newly approved healthcare products.
The process for determining whether a payor will provide coverage for a product may be separate from the process for setting the price
or reimbursement rate that the payor will pay for the product once coverage is approved. Third-party payors may limit coverage to specific
products on an approved list, or formulary, which might not include all of the approved products for a particular indication. We may need
to conduct expensive pharmacoeconomic studies to demonstrate the cost-effectiveness of our drug candidates for formulary coverage and
reimbursement, in addition to the costs required to obtain FDA or other comparable regulatory approvals. Even with such studies, our drug
candidates may be considered less safe, less effective or less cost-effective than existing products, and third-party payors may not provide
coverage and reimbursement for our drug candidates, in whole or in part.

In addition, particularly in the United States
and increasingly in other countries, we are required to provide discounts and pay rebates to state and federal governments and agencies
in connection with purchases of our drug candidates that are reimbursed by such entities. It is possible that future legislation in the
United States and other jurisdictions could be enacted to potentially impact reimbursement rates for the drug candidates we are developing
and may develop in the future and could further impact the levels of discounts and rebates paid to federal and state government entities.
Any legislation that impacts these areas could impact, in a significant way, our ability to generate revenues from sales of drug candidates
that, if successfully developed, we bring to market. Political, economic and regulatory influences are subjecting the healthcare industry
in the United States to fundamental changes. There have been, and we expect there will continue to be, legislative and regulatory proposals
to change the healthcare system in ways that could significantly affect our future business.

In the European Union, pricing and reimbursement
schemes vary widely from country to country. Some Member States provide that products may be marketed only after a reimbursement price
has been agreed, whereas other Member States may require the completion of additional studies that compare the cost-effectiveness of a
particular drug candidate to currently available therapies or so-called health technology assessments, in order to obtain reimbursement
or pricing approval. For example, the European Union provides options for its Member States to restrict the range of products for which
their national health insurance systems provide reimbursement and to control the prices of medicinal products for human use. Member States
may approve a specific price for a product or may instead adopt a system of direct or indirect controls on the profitability of the company
placing the product on the market. Other Member States allow companies to fix their own prices for products, but the competent authorities
in such Member States monitor and control prescription volumes and issue guidance to physicians to limit prescriptions. Recently, many
countries in the European Union have increased the amount of discounts required for medicinal products, and such efforts could continue
as countries attempt to manage healthcare expenditures, especially in light of the severe fiscal and debt crises experienced by such countries.
The downward pressure on healthcare costs in general, particularly prescription products, has become intense. As a result, increasingly
high barriers are being erected to the entry of new products. Political, economic and regulatory developments may further complicate pricing
negotiations, and pricing negotiations may continue after reimbursement has been obtained. Reference pricing used by various Member States,
and parallel trade, i.e., arbitrage between low-priced and high-priced Member States, can further reduce prices.

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In international markets, reimbursement and healthcare
payment systems vary significantly by country, and many countries have instituted price ceilings on specific products and therapies. Future
legislation, or regulatory actions implementing recent or future legislation may have a significant effect on our business. Our ability
to successfully commercialize products depends in part on the extent to which reimbursement for the costs of our drug candidates and related
treatments will be available in the United States and worldwide from government and health administration authorities, private health
insurers and other organizations. Moreover, a payor’s decision to provide coverage for a drug product does not imply that an adequate
reimbursement rate will be approved. Third-party reimbursement may not be sufficient to maintain price levels high enough to realize an
appropriate return on investment in product development. The adoption of certain proposals could limit the prices we are able to charge
for our drug candidates, the amounts of reimbursement available for our drug candidates, and limit the acceptance and availability of
our drug candidates. Therefore, substantial uncertainty exists as to the reimbursement status of newly approved healthcare products by
third-party payors.

Healthcare Reform and Potential Changes to Healthcare Laws

The FDA’s and other regulatory authorities’
policies may change, and additional government regulations may be enacted, that could prevent, limit or delay regulatory approval of our
drug candidates. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies,
or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we otherwise may have obtained and we
may not achieve or sustain profitability, which would adversely affect our business, prospects, financial condition and results of operations.

A primary trend in the U.S. healthcare industry
and elsewhere is cost containment. We expect that there will continue to be a number of federal and state proposals to implement governmental
pricing controls and limit the growth of healthcare costs, including the cost of prescription drugs. For example, in March 2010, the Patient
Protection and Affordable Care Act (“ACA”), which, among other things, increased the minimum Medicaid rebates owed by most
manufacturers under the Medicaid Drug Rebate Program; introduced a new methodology by which rebates owed by manufacturers under the Medicaid
Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected; extended the Medicaid Drug Rebate
Program to utilization of prescriptions of individuals enrolled in Medicaid managed care plans; imposed mandatory discounts for certain
Medicare Part D beneficiaries as a condition for manufacturers’ outpatient drugs coverage under Medicare Part D; and established
a Center for Medicare Innovation at CMS, to test innovative payment and service delivery models to lower Medicare and Medicaid spending.

Legislative and regulatory changes under the ACA
are possible, but it is unknown what form any such changes or any law would take and how or whether it may affect the pharmaceutical industry
as a whole or our business in the future. We expect that changes or additions to the ACA, the Medicare and Medicaid programs, and changes
stemming from other healthcare reform measures, especially with regard to healthcare access, financing or other legislation in individual
states, could have a material adverse effect on the healthcare industry in the United States.

Moreover, there has been heightened governmental
scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several Congressional inquiries
and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing, review
the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drug
products. Notably, the Further Consolidated Appropriations Act for 2020 into law (P.L. 116-94), which became law on December 20, 2019,
includes a piece of bipartisan legislation called the Creating and Restoring Equal Access to Equivalent Samples Act of 2019 (the “CREATES
Act”). The CREATES Act aims to address the concern articulated by both the FDA and others in the industry that some brand manufacturers
have improperly restricted the distribution of their products, including by invoking the existence of a REMS for certain products, to
deny generic and biosimilar product developers access to samples of brand products. Because generic and biosimilar product developers
need samples to conduct certain comparative testing required by the FDA, some have attributed the inability to timely obtain samples as
a cause of delay in the entry of generic and biosimilar products. To remedy this concern, the CREATES Act establishes a private cause
of action that permits a generic or biosimilar product developer to sue the brand manufacturer to compel it to furnish the necessary samples
on “commercially reasonable, market-based terms.” Although lawsuits have been filed under the CREATES Act since its enactment,
those lawsuits have settled privately; therefore, to date no federal court has reviewed or opined on the statutory language and there
continues to be uncertainty regarding the scope and application of the law.

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More recently, in August 2022, President Biden
signed into the law the Inflation Reduction Act of 2022 (“IRA”). Among other things, the IRA has multiple provisions that
may impact the prices of drug products that are both sold into the Medicare program and throughout the United States. For example, a manufacturer
of a drug or biological product covered by Medicare Parts B or D must pay a rebate to the federal government if the drug product’s
price increases faster than the rate of inflation. This calculation is made on a drug product by drug product basis and the amount of
the rebate owed to the federal government is directly dependent on the volume of a drug product that is paid for by Medicare Parts B or
D. Additionally, starting in payment year 2026, CMS will negotiate drug prices annually for a select number of single source Part D drugs
without generic or biosimilar competition. CMS will also negotiate drug prices for a select number of Part B drugs starting for payment
year 2028. If a drug product is selected by CMS for negotiation, it is expected that the revenue generated from such drug will decrease.
CMS has begun to implement these new authorities and entered into the first set of agreements with pharmaceutical manufacturers to conduct
price negotiations in October 2023. However, the IRA’s impact on the pharmaceutical industry in the United States remains uncertain,
in part because multiple large pharmaceutical companies and other stakeholders (e.g., the U.S. Chamber of Commerce) have initiated federal
lawsuits against CMS arguing the program is unconstitutional for a variety of reasons, among other complaints. The outcome of such ongoing
lawsuits, as well as potential legislative changes enacted by Congress or programmatic changes implemented at CMS by the Trump administration,
may impact the IRA drug price negotiation program. For example, the One Big Beautiful Bill Act, which President Trump signed into law
in July 2025, modified the IRA’s exclusion protecting orphan drugs designated for a single rare disease indication from required
pricing negotiations by expanding it to apply to drugs designated for multiple rare diseases and by prohibiting Medicare price negotiations
until seven years after an orphan drug, or 11 years after an orphan biologic, is approved for a non-orphan indication, which will significantly
delay pricing negotiations for certain high-priced and widely used drugs.

At the state level, legislatures are increasingly
passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or
patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures,
and, in some cases, designed to encourage importation from other countries and bulk purchasing. In December 2020, the U.S. Supreme Court
held unanimously that federal law does not preempt the states’ ability to regulate pharmacy benefit managers (“PBMs”),
and other members of the healthcare and pharmaceutical supply chain, an important decision that has led to more aggressive efforts by
states in this area. The Federal Trade Commission (“FTC”) in mid-2022 also launched sweeping investigations into the practices
of the PBM industry that could lead to additional federal and state legislative or regulatory proposals targeting such entities’
operations, pharmacy networks, or financial arrangements. Numerous PBM reforms are being considered in both the Senate and the House of
Representatives, including diverse legislative proposals such as eliminating rebates; divorcing service fees from the price of a drug,
discount, or rebate; prohibiting spread pricing; limiting administrative fees; requiring PBMs to report formulary placement rationale;
promoting transparency. Significant efforts to change the PBM industry as it currently exists in the U.S. may affect the entire pharmaceutical
supply chain and the business of other stakeholders, including pharmaceutical developers like us. In addition, regional healthcare authorities
and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products, and which suppliers will
be included in their prescription drug and other healthcare programs. This could reduce the ultimate demand for our products or put pressure
on our product pricing, which could negatively affect our business, results of operations, financial condition and prospects.

In the European Union and the United Kingdom, similar
political, economic and regulatory developments may affect our ability to profitably commercialize any of our drug candidates, if approved.
In addition to continuing pressure on prices and cost containment measures, legislative developments in the United Kingdom or at the European
Union or member state level may result in significant additional requirements or obstacles that may increase our operating costs. The
delivery of healthcare in the European Union, including the establishment and operation of health services and the pricing and reimbursement
of medicines, is almost exclusively a matter for national, rather than European Union, law and policy. National governments and health
service providers have different priorities and approaches to the delivery of healthcare and the pricing and reimbursement of products
in that context. In general, however, the healthcare budgetary constraints in most member states and the United Kingdom have resulted
in restrictions on the pricing and reimbursement of medicines by relevant health service providers. Coupled with increasing regulatory
burdens on those wishing to develop and market products, this could prevent or delay marketing approval of our drug candidates, restrict
or regulate post-approval activities and affect our ability to commercialize any products for which we obtain marketing approval. In international
markets, reimbursement and healthcare payment systems vary significantly by country, and many countries have instituted price ceilings
on specific products and therapies.

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We
cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative or
executive action, either in the United States or abroad. We expect that additional state and federal healthcare reform measures will
be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and
services, including prescription pharmaceuticals.

Environmental, Health and Safety Regulation

We are subject to numerous
federal, state and local environmental, health and safety (“EHS”) laws and regulations relating to, among other matters, safe
working conditions, product stewardship, environmental protection, and handling or disposition of products, including those governing
the generation, storage, handling, use, transportation, release, and disposal of hazardous or potentially hazardous materials, medical
waste, and infectious materials that may be handled by our partner research laboratories. Some of these laws and regulations also require
us to obtain licenses or permits to conduct our operations. If we fail to comply with such laws or obtain and comply with the applicable
permits, we could face substantial fines or possible revocation of our permits or limitations on our ability to conduct our operations.
Certain of our development and manufacturing activities may involve, from time to time, use of hazardous materials, and we believe we
are in compliance with the applicable environmental laws, regulations, permits, and licenses. However, we cannot ensure that EHS liabilities
will not develop in the future. EHS laws and regulations are complex, change frequently and have tended to become more stringent over
time. Although the costs to comply with applicable laws and regulations, have not been material to date, we cannot predict the impact
on our business of new or amended laws or regulations or any changes in the way existing and future laws and regulations are interpreted
or enforced, nor can we ensure we will be able to obtain or maintain any required licenses or permits.

United States Foreign Corrupt Practices
Act

In general, the Foreign
Corrupt Practices Act of 1977, as amended (“FCPA”), prohibits offering to pay, paying, promising to pay, or authorizing the
payment of money or anything of value to a foreign official in order to influence any act or decision of the foreign official in his
or her official capacity or to secure any other improper advantage in order to obtain or retain business for or with, or in order to
direct business to, any person. The prohibitions apply not only to payments made to “any foreign official,” but also those
made to “any foreign political party or official thereof,” to “any candidate for foreign political office” or
to any person, while knowing that all or a portion of the payment will be offered, given, or promised to anyone in any of the foregoing
categories. “Foreign officials” under the FCPA include officers or employees of a department, agency, or instrumentality
of a foreign government. The term “instrumentality” is broad and can include state-owned or state-controlled entities. Importantly,
United States authorities deem most healthcare professionals and other employees of foreign hospitals, clinics, research facilities and
medical schools in countries with public healthcare and/or public education systems to be “foreign officials” under the FCPA.
When we interact with foreign healthcare professionals and researchers in testing and marketing our products abroad, should any of our
product candidates receive foreign regulatory approval in the future, we must have policies and procedures in place sufficient to prevent
us and agents acting on our behalf from providing any bribe, gift or gratuity, including excessive or lavish meals, travel or entertainment
in connection with marketing our products and services or securing required permits and approvals. The FCPA also obligates companies
whose securities are listed in the United States to comply with accounting provisions requiring us to maintain books and records that
accurately and fairly reflect all transactions of the corporation, including international subsidiaries, and to devise and maintain an
adequate system of internal accounting controls for international operations.

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Inflation
and Seasonality

Management
believes inflation has not had a material impact on our operations or financial condition. Management further believes that our operations
are not currently subject to seasonal influences due to our current lack of marketed products. Moreover, the targets of our drug candidates
are not seasonal diseases. Accordingly, should any of our drug candidates be approved, management does not expect that our business would
be subject to seasonal influences.

Manufacturing
and Raw Materials

We have no manufacturing capabilities and, as noted above, are dependent
on third parties for the cost effective manufacture and manufacturing process development of our drug candidates. Problems with third-party
manufacturers or the manufacturing process as such may delay or jeopardize clinical trials and commercialization of our drug candidates.
We or our third-party manufacturers may also experience delays due to the DEA’s limitations on controlled substances discussed above.

Human
Capital Resources

As of June 30, 2025, we had a total of twelve employees, all of which
are full time. Of these employees, eight were employed in R&D and four were employed in general management and administration.

Each
of our full-time employees has entered into an employment agreement with an unlimited term. We may only terminate the employment of any
of our employees in accordance with the relevant employee contract of employment.

Our
standard contract of employment for full-time employees provides that we can terminate the employment of an employee without notice for
serious misconduct or with between one to six months’ notice without cause (as set out in the relevant employee’s contract
of employment).

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Information About Our Directors and Executive
Officers

The following persons currently serve as our directors
and executive officers:

Directors and Executive Officers

Position

Executive Officers

Joel Latham

President, Chief Executive Officer and Director

Joseph Swan

Chief Financial Officer and Corporate Secretary

Lou Barbato, M.D.

Chief Medical Officer

Lekhram Changoer

Chief Technology Officer

Directors

Troy Valentine

Director/Co-Founder, Alignment Capital Pty Ltd

Peter Widdows

Board Chair and Non-Executive Director, Youi Insurance

Non-Executive Chaiman, Sunny Queens Australia

George Anastassov, M.D.

Doctor, Maxillofacial Surgery Services

Robert Clark

Vice President, Regulatory Affairs, Novo Nordisk A/S

Corporate
Information

Incannex
Healthcare Inc., was incorporated in Delaware in July 2023. On November 28, 2023, the redomiciliation of Incannex Healthcare Limited,
an Australian corporation (“Incannex Australia”), was implemented under Australian law in accordance with the Scheme Implementation
Deed, as amended and restated on September 13, 2023, between Incannex Australia and the Company. As a result of the redomiciliation,
Incannex Australia became a wholly-owned subsidiary of Incannex Healthcare Inc., which is the new ultimate parent company of the subsidiaries
listed in the section entitled “Organizational Structure” below.

Our
principal office is located at Suite 105, 8 Century Circuit, Norwest 2153, NSW Australia and our telephone number is +61 409 840 786.
We currently intend to relocate our principal office to Dubai sometime over the coming months. Our address on the Internet is www.incannex.com.
The reference to our website address does not constitute incorporation by reference of the information contained at or available through
our website, and you should not consider it to be a part of this Annual Report.

The
information on, or accessible through, our website is not part of this Annual Report. We file Annual Reports on Form 10-K, Quarterly
Reports on Form 10-Q, Current Reports on Form 8-K, proxy and information statements and amendments to those reports with the Securities
and Exchange Commission (“SEC”). Our filings with the SEC are available free of charge on the SEC’s website and on
the “Investors” section of our website as soon as reasonably practicable after we electronically file such material with,
or furnish it to, the SEC. The SEC maintains an internet site that contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC at www.sec.gov.

Organizational
Structure

Below
is a list of our significant wholly-owned subsidiaries, date of formation and jurisdiction. These subsidiaries were established to allow
us to conduct commercial and clinical operations in Europe and the United States and expand our operations in Australia.

Subsidiary

Date of

Formation/Acquisition

Jurisdiction

Incannex Healthcare Limited (now Incannex Healthcare Pty Ltd)

November 30, 2023

Victoria, Australia

Incannex Pty Ltd

November 30, 2018

Victoria, Australia

Psychennex Pty Ltd

November 20, 2020

Victoria, Australia

APIRx Pharmaceutical USA, LLC

August 5, 2022

Delaware

Clarion Clinics Group Pty Ltd

March 3, 2023

Victoria, Australia

Clarion Model Clinic Pty Ltd

March 2, 2023

Victoria, Australia

Psychennex Licensing and Franchising Pty Ltd

March 2, 2023

Victoria, Australia

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