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Lexaria Bioscience Corp: THE INVESTMENT CASE
INVESTMENT OVERVIEW

Lexaria Bioscience: The cannabis company developing a potentially life-saving technology

Dehydratech is essentially a delivery system that allows drugs and vitamins to get into the bloodstream quicker, while making them taste and smell better at the same time
muffins and cannabis
INVESTMENT OVERVIEW: LXX The Big Picture
Cannabis-infused chocolate and drinks makers are using Dehydratech to improve their products

It’d be easy to dismiss a company which pivots away from oil and gas towards cannabis as one which has jumped on the bandwagon to take advantage of what is now a booming industry.

But not Lexaria Bioscience Corp (CNSX:LXX), which made its move into cannabis back in 2013 before it was trendy.

WATCH: Lexaria continues to show success after restructuring

At the time, it owned a producing oil field in Mississippi but there was a problem: the banks were only interested in financing shale plays. So with shareholders on board, it decided to sell up and use the leftover cash to move into a new market.

“It was a really tough call because cannabis wasn’t nearly as sexy or acceptable as it now,” explains Lexaria chief executive Chris Bunka.

Within a year, Lexaria had snapped up the rights to a technology called Dehydratech, which is now the backbone of the company.

Essentially it allows cannabidiol (CBD) and other oils to be dehydrated into an odourless, tasteless powder and mixed with xanthan gum, corn flour and other base ingredients which can then be added to foods, drinks and creams.

Another key characteristic of Dehydratech is that it allows drugs and vitamins – in the case of cannabis, CBD – to get into the bloodstream quicker.

Normally, if you were to eat a cannabis-infused food, it might take as long as 40 minutes before you start to feel its effects. With Dehydratech, the CBD gets to work in between 5-15 minutes.

“In short,” Bunka says, “it tastes better, smells better, gets to work quicker and more of it gets into the bloodstream.”

More than 50 patents pending

This is a ready-to-go technology, as well. Initial testing started in 2015 which proved the concept worked and since then various in-animal and in-human tests have been carried out.

“It has been tested more rigorously than most of our competitors and it tests very well,” Bunka says.

Lexaria secured its first patent for the technology back in 2016 and received a second last December. It now has ten awarded in total with a further 53 pending.

Five companies are now using Dehydratech in their products, including the third-largest cannabis chocolate maker in Colorado, 1906 Chocolates, and a Canadian wine and beer maker called Hill Street Beverages.

The plan is for that number to expand quickly, and Bunka reckons there are a couple of levers which will likely be pulled over the next year to enable that.

Local laws will probably be the main growth driver. Even in forward-thinking Canada, edibles are still banned although that will likely change in 2019.

Across the border in the US, more states are also expected to follow the likes of Colorado and California and legalize cannabis.

Add to that some more patent grants and a new US$1mln Kelowna-based laboratory, and next year looks set to be a pivotal one for Lexaria.

“2018 was a good year us, but I think 2019 will be our biggest year yet, no question about it,” claims Bunka.

More than just cannabis, though

While cannabis is the main market right now, Lexaria is thinking long-term, too.

It is developing Dehydratech so it can be used with other things, such as nicotine and painkillers called nonsteroidal anti-inflammatory drugs, or NSAIDs for short.

This, according to Bunka, is arguably what will be the real money-maker company further down the line.

“Everybody is excited about cannabis, but generally speaking, nobody ever dies from using cannabis. On the other hand, between 7,000 and 10,000 people in the US who take NSAIDs die every year, usually through uncontrolled bleeding.

“Out technology is patented for delivering NSAIDs, and because we get so much more effective delivery, in theory, a manufacturer could use a lower dose to give you the same amount of pain relief.”

As for nicotine, Bunka thinks its technology has “monster” potential in this area.

“The same nicotine hit that is delivered in a cigarette, we can deliver in a cup of coffee or in a soft drink or in a pill.

“There’s no smoke, there’s no odour, there’s no taste. You’re offending no one and you’re not going to get cancer because those small amounts of nicotine are not cancerous.”

'Chance to change the world'

Previous rat studies showed that the technology worked, and Lexaria is now gearing up for in-human trials which could start as soon as next year.

A number of these studies will need to be carried out before the technology is commercially ready and the company is looking to partner with industry players to accelerate that.

Still, Bunka is hopeful that the technology will be ready to be submitted for approval for use in nicotine and NSAIDs within two years.

That would mark quite a turnaround for an ex-oil company turned cannabis firm, which could end up commercialising a technology which saves lives.

“It sounds so cliché, but this is our chance to change the world.”

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