Company: IXHL
Filing Date: 2025-09-29
Form Type: 10-K
Source: 0001213900-25-092837
Chunk: 279

Company: Incannex Healthcare Inc.
Filing Date: 2025-09-29
Form: 10-K
Item: Item 1A
Chunk 279
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 costs could increase and our ability to generate revenue could be
delayed.

In addition, we are obligated under our contracts
with CROs to reimburse these CROs for certain expenses incurred by them in the performance of the services they provide to us. The precise
timing and amounts of these expenses and our corresponding reimbursement obligations are and may continue to be uncertain and outside
of our control. We incur the costs for these reimbursement obligations when invoiced by the CRO. We often receive invoices long after
the CRO has performed the services that are the subject of the invoice. As a result, our related operating expenses have and may continue
to vary significantly period-to-period and are not necessarily indicative of the expenses associated with the activities of the CRO conducted
during the period covered by the periodic report in which these expenses are disclosed.

Because
we have relied on third parties, our internal capacity to perform these functions is limited. Outsourcing these functions involves risk
that third parties may not perform to our standards, may not produce results in a timely manner or may fail to perform at all. In addition,
the use of third-party service providers requires us to disclose our proprietary information to these parties, which could increase the
risk that this information will be misappropriated. We currently have a small number of employees, which limits the internal resources
we have available to identify and monitor our third-party providers. To the extent we are unable to identify and successfully manage
the performance of third-party service providers in the future, our business may be adversely affected. Though we carefully manage our
relationships with our CROs, there can be no assurance that we will not encounter challenges or delays in the future or that these delays
or challenges will not have a material adverse impact on our business, financial condition and prospects.

51

A potential
breakthrough therapy designation by the FDA for our drug candidates may not lead to a faster development or regulatory review or approval
process, and it does not increase the likelihood that our drug candidates will receive marketing approval.

We
may seek a breakthrough therapy designation from the FDA for one or more of our drug candidates. A breakthrough therapy is defined as
a drug product that is intended, alone or in combination with one or more other drugs, to treat a serious or life-threatening disease
or condition, and preliminary clinical evidence indicates that the drug product may demonstrate substantial improvement over existing
therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development.
For drug products