Cannabinoid-focused Lexaria Bioscience Corp (CSE:LXX) (OTCMKTS:LXRP) is adding to its roster with a new partnership deal with venture capital firm Altria Ventures aimed at developing reduced-risk nicotine consumer products.
The company said the partnership will focus on using Lexaria's Bioscience's proprietary DehydraTECH™ platform, which allows cannabidiol (CBD) and other oils to be dehydrated into an odorless, tasteless powder.
DehydraTECH also allows drugs and vitamins – in the case of cannabis, CBD – to get into the bloodstream quicker.
Shares of Lexaria Bioscience jumped Tuesday, up 25% at C$2.10 in Toronto.
"Lexaria Bioscience is proud that, after careful selection, Altria has chosen to fund research into DehydraTECH™ technology and potentially commercialize this technology for oral nicotine," said Chris Bunka, CEO of Lexaria Bioscience, in a statement.
"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."
Under the terms of the agreement, Altria has been granted exclusive DehydraTECH license rights to commercialize oral nicotine products in the US.
Altria will fund a research & development program in exchange for a minority equity interest in Lexaria Nicotine and certain DehydraTECH(™) license rights. Altria will provide initial funding of US$1 million, with the option for additional funding of up to US$12 million through multiple phased private financings.
The company said Altria will initially have the right to appoint one of the seven directors on Lexaria Nicotine's board of directors and, through the additional phased investments, may have the right to appoint up to three of the seven directors.
The company added that Altria has the option to acquire 100% ownership interest in Lexaria Nicotine commensurate with fair market value. Lexaria Bioscience has not sold or optioned any of its own equity.
'Powerful' patented DehydraTECH technology
"Lexaria Bioscience has repeatedly demonstrated the powerful effects of its patented DehydraTECH(™) technology for enhancing the palatability and speed of onset of orally-consumed bioactive substances such as nicotine," said John Docherty, president of Lexaria Bioscience.
"Laboratory research to date on oral nicotine formulations has been quite encouraging. We are very excited to advance the clinical phases of our comprehensive R&D Program together with Altria with a view to full commercial product development."