Nexalis Therapeutics Reports 52% Loss Increase and Funding Facility Cancellation

Financial Losses Widen Amid Funding Withdrawal

Nexalis Therapeutics Ltd (ASX:NX1) has reported a 51.9% increase in its half-year loss after tax, widening to $1.3 million for the six months ended 30 June 2026. The loss escalation reflects sustained investment in clinical development programs, with product development expenditure rising to $1.18 million from $1.01 million in the prior comparable period.

The company’s net tangible assets per share deteriorated further into negative territory, standing at -0.74 cents compared to -0.40 cents a year earlier, underscoring the tightening financial position.

Cancellation of $52.3 Million Funding Facility Forces Trial Suspensions

A major blow came when Linlithgow Family Office (LFO) permanently cancelled the remaining commitment under a $52.3 million debt funding facility originally secured to accelerate Nexalis’ clinical programs targeting breakthrough cancer pain (IRX-211), panic disorder (IRX-616a), and treatment-resistant depression (SRX-25). Since inception, Nexalis drew down only $0.8 million of the committed funds.

Following the cancellation, the company entered a settlement deed converting the outstanding $641,848 debt into 15 million options exercisable at $0.15, expiring in five years. This agreement also saw cancellation of 38.4 million shares held by the lender.

Clinical Development Impacted as Trials Temporarily Halted

The funding withdrawal forced Nexalis to temporarily suspend study orders with its CRO partner iNGENū for both the Phase 2 IRX-211 and Phase 1 IRX-616a clinical trials. While the Phase 1 trial for IRX-616a was successfully completed with positive safety and tolerability results, the suspension delays database lock and the formal clinical study report. Nevertheless, the company is advancing Phase 2 planning for IRX-616a based on available data.

Recruitment for the IRX-211 Phase 2 trial progressed satisfactorily at the lead site, but overall patient recruitment challenges prompted a comprehensive review of trial operations and budgets. The SRX-25 program remains in the planning phase, with protocol drafting underway but clinical activities deferred pending funding.

Capital Management and Cost Controls Amid Cash Constraints

To bolster working capital, Nexalis completed a $750,000 placement in November 2025 at $0.025 per share, issuing approximately 30 million new shares along with attaching options. Post-period, the company issued over 4.1 million performance rights to current and former directors as remuneration, reflecting ongoing efforts to conserve cash.

Cash and cash equivalents improved to $791,334 at 30 June 2026, supported by a $630,103 research and development tax rebate. However, current liabilities exceeded current assets by $1.88 million, and the company reported a net liability position of $1.86 million, prompting the auditor to flag a material uncertainty regarding going concern.

Board Changes and Strategic Refocus

The half-year saw board refreshment with the appointment of CEO Darryl Davies and Non-Executive Director James Barrie, alongside the resignation of two directors. The company also rebranded from InhaleRx Limited to Nexalis Therapeutics, signalling a strategic pivot beyond inhaled therapies to a diversified clinical-stage drug development portfolio.

Management is actively engaging clinical sites and vendors to explore capital-efficient pathways to resume trials and is seeking alternative funding partners, though no substantive discussions have yet materialised.