In our previous report about Lexaria Bioscience Corp (OTCMKTS:LXRP), we noted that the market was responding very well to the development of its new cannabinoid sublingual tablets.
We also noted that the new product was expected to bring new revenues and being alert on new developments seemed to be a great idea.
We were not wrong.
Have a look at the share price action.
For those who don’t know, LXRP “has developed and out-licensed its disruptive delivery technology that promotes healthier ingestion methods, lowers overall dosing and enhances effectiveness of lipophilic active molecules.”
We believe that the most significant in this company is that it owns patents pending in over 40 countries related to edible forms of cannabinoids. We believe that this is what is driving market interest in this company.
May was a good month in terms of company announcements.
On May 2, 2017, the company highlighted a $1 million combined research and development and intellectual property budget. The company said that it would collaborate from June 2017 with Canada’s National Research Council. Several groups of molecules studied include Cannabinoids, Vitamins, NSAIDs, and Nicotine. It was reminded in the press release that the company owns 18 patents pending, and patent applications filed in more than 40 countries around the world.
On May 4, 2017, the company noted new plans to commence nicotine absorption research beginning in the summer of 2017. The market for such type of developments seems large. The cigarette industry in the world was worth $699 billion in 2015 and Centers for Disease Control and Prevention noted that tobacco use will cause more than 8 million annual deaths by 2030. In our opinion, there is a big opportunity for the company in this market.
Furthermore, more R&D plans were released on May 10, 2017. The company noted plans for research and formulation development on nonsteroidal anti-inflammatory drugs. LXRP noted that it will make use of its patented technology. The company is also targeting a big market: “Pain-relief drugs are comprised mostly of NSAIDs and of opioids and represented a $36.6 billion market in 2014.”
Additionally, it was noted in the same press release that thanks to exercise of stock warrants, the company had received $34,753.40. We celebrate the news, as new money is being received. Furthermore, we believe that the company growth will be able to offset the potential stock dilution. On August 16, 2017, new exercises were also noted as well as on September 22, 2017.
The most significant in June was the election of a new CFO, Allan Spissinger. He brings 10 years working experience in corporate IT infrastructure and software development projects beside experience in finance and accounting. He has worked for PricewaterouseCoopers and holds the CPA designation.
Furthermore, in June, Lexaria filed a new provisional patent application with the US Patent and Trademark Office No. 62/519,511, with a filing date of June 14, 2017. The patent application covers processing of cannabinoids, vitamins, NSAIDs, and nicotine.
We believe that the market did not recognize the work of LXRP in June. The share price did not react to the announcements, which, we believe, was not correct. The company is working on increasing its IP assets, which may help increase shareholder value in the future.
In July, more developments were released including the patent granted by the Australian Patent Office:
“The Australian Patent Office has granted patent #2015274698 which protects Lexaria’s method of improving absorption, speed of onset, and taste of cannabinoid active agents in edible products. The term of the patent is 20 years from June 10, 2015.” Source
According to the company, this patent will help the company enter the recently legalized Australian cannabis marketplace. As a result, the market should be expecting more revenues, and more opportunities. Furthermore, in July, the company noted that the National Research Council of Canada and the company were starting laboratory work. It was highlighted that NRC will help further develop its IP portfolio, which will make the company grow in the long term.
We believe that the most interesting news released in August was the announcement of the world’s first clinical study on human volunteers of cannabidiol within Lexaria’s high absorption TurboCBD™ product. LXRP will assess its effects on both cardiovascular health and cognitive function. Respected Professor Philip Ainslie, PhD, Co-Director of the Centre for Heart, Lung and Vascular Health, UBC Okanagan Campus, Kelowna, Canada, are the Principal Investigators.
We believe that the announcements released in June, July and August made the share price increase. In the stock chart, it can be seen how the share price trends up from $0.3 to $0.5.
Finally, the next big share price move occured as a result of the news released on Oct 31, 2017. The United States Patent and Trademark Office had given a new Notice of Allowance to the company for the use of its technology as a delivery platform for all cannabinoids including THC; fat soluble vitamins, non steroidal anti-inflammatory pain medications, and nicotine. The patent application number is 15/225,799, “Food and Beverage Compositions Infused With Lipophilic Active Agents and Methods of Use Thereof.”
The announcement was very significant, as this intellectual property protection will help the company expand its business opportunities in 2018. Chief Executive Officer, Chris Bunka, was quoted:
“the world’s first nicotine edibles for the smokeless tobacco industry, or enhanced products for NSAID-derived pain management, as well as in the rapidly growing cannabis market.” Source
Currently trading with a market cap of $26 million, LXRP is an exciting story among small caps. Apart from the outstanding growth that it has shown in the last months, we appreciate very much its financial situation. The company showed $2.7 million in cash in the last quarterly report for the period ended in May. Additionally, it has almost no debt. Hence, we believe that the company is very capitalized to keep the innovations going. To sum up, there is a lot to like with LXRP and the stock should continue marching onto highs.
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Image courtesy of MiraCosta Community College via Flickr
Disclosure: We have no position in LXRP and have not been compensated for this article.