Lexaria Bioscience Corp (OTCMKTS: LXRP) has started correcting higher after a steep pullback from this year highs. A stellar start to the year saw the stock skyrocket from below the $1 a share mark to highs of $1.60. However, soaring short selling pressure saw the stock lose its bullish momentum resulting in a steep pullback.
Lexaria Bioscience Share Price Analysis
The upside action has started picking up pace following the confirmation that Altria Group has invested $12 million in the company. Lexaria market sentiments have also inched higher following the launch of the largest cannabinoid research and development program in the company’s history.
A bounce back from the $1.04 mark has opened the door for the stock to make a run for this year highs of $1.52. After the underperformance of last year, Lexaria Bioscience needs to take out the $1.60 resistance level to turn bullish.
Above the $1.60 level, the stock is likely to make a run for 52-week highs of $2.43, as bulls who have been on the fence are likely to join the fray. Conversely, the stock must hold above the $1 a share mark to avert further slides, back to 52-week lows.
Below the $1 psychological level, Lexaria Bioscience could elicit increased short selling pressure given the underlying long-term bear trend.
What Does Lexaria Bioscience Do?
Lexaria Bioscience is engaged in the development and licensing of disruptive delivery technologies that Seek to promote healthier ingestion methods. The company boasts of a robust Intellectual Property portfolio with multiple patents in over 40 countries. DehydraTECH is the company’s lead delivery technology.
Altria Group $12 Million Investment
Lexaria Bioscience share price is yet to reflect the company’s tremendous potential especially on the signing of a multimillion deal with Altria Group Inc. (NYSE: MO). Altria Group has agreed to invest up to $12 million to accelerate the development of the company’s flagship delivery technology, DehydraTECH.
The technology is designed to enhance the performance of beneficial compounds in ingestible products. Under the terms of the agreement, the two are to join forces in exploring the potential use of the technology in oral reduced-risk nicotine consumer products.
Altria has also agreed to pay Lexaria Bioscience royalties on revenues generated from the sale of nicotine products containing DehydraTECH. In return, Altria has been granted access to Lexaria Bioscience patented technology.
“This partnership will provide significant benefits to Lexaria Bioscience and its shareholders with a world-class R&D Program and regulatory compliance process. We believe Altria is the best corporate partner we could work with to truly make a difference in the lives of millions of consumers,” stated Lexaria CEO Chris Bunka.
Cannabinoid Research Program
Even as Lexaria Bioscience continues to achieve progress on the development of DehydraTECH, it has also commenced work on a large cannabinoid research program. The program consists of 11 separate animal studies.
The cannabinoid R&D program seeks to test for performance-enhancing variations of the company’s lead delivery technology DehydraTECH. Management expects research works to lead to improvements in the technology as well as additional patent filings.
“The 2019 R&D program will for the first time evaluate DehydraTECH in combination with these nanotech emulsion formulas. Lexaria has produced countless varieties of beverage formulations enhanced with a combination of DehydraTECH together with nanotech enhancement,” Lexaria Bioscience in a statement.
Separately, Lexaria Bioscience has moved to strengthen and enhance its profile in the markets by engaging the services of investor relation service firm Oak Hill Financials Inc. The firm is tasked with the responsibility of developing and deploying a comprehensive capital Market strategy and campaign. The firm will also cater to retail investor needs while providing other client services.
While Lexaria Bioscience has underperformed a great deal over the past 12 months, its long-term prospects are as solid as ever. The signing of a multi-million-dollar deal with Altria Group underscores growing confidence that DehydraTECH can become a game changer especially in the delivery of CBD among other ingestible products.
The company launching the largest Cannabidiol research program in its history also underscores commitment to innovation, crucial to coming up with new products and generating long term value. Lexaria Bioscience should continue to pick up investor support as it continues to refine its DehydraTECH technology.
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Disclosure: We have no position in LXRP and have not been compensated for this article.