I attended the Lexaria Bioscience Corp. (OTCQX: LXRP) Annual General Meeting last week. Present were Chris Bunka, CEO, John Docherty, President and Alan Spissinger, CFO. The meeting featured some lively and informative discussion. Here are some highlights:
- The announcements LXRP was changing its corporate domicile to Canada from the U.S. and the creation of wholly owned subsidiaries to hold the company’s intellectual properties in nicotine and pharmaceuticals are important. If LXRP is going to make licensing agreements with major companies, it is critical to those majors the agreements are made with companies not in conflict with U.S. federal law. These changes pave the way.
- Of the nicotine absorption improvement performance results reported in April of particular interest was the 560% higher brain levels of nicotine. This appeared to be the statistic that attracted the most attention. The result was something not expected and apparently not duplicated by anyone else.
- The recent announcement of a new licensing agreement with Nuka Enterprises was also a key milestone. For almost two years, Nuka has been using LXRP’s DehydraTECHTM in their award winning 1906 brand of award-winning cannabis chocolates during which time Nuka went from a start-up to the third largest cannabis chocolate maker in the U.S. The fast onset times, efficacy, unaffected taste, and unique formulations motivated Nuka to renew the agreement for 10 years. This is considered a proof of concept event for LXRP and it could trigger a number of new agreements for the company.
- The agreement with Cannfections Group is also significant. Cannfections has been in the chocolate making business for over 85 years and they manufacture retail products for several leading international and domestic chocolate brands. Given that the vast majority of the 109 Licensed Producers in Canada are not and may never be in a position to manufacture their own cannabis confections, Cannfections is well positioned to do that for white label products incorporating Lexaria’s DehydraTECHTM technology.
- There are a number of regulatory requirements coming forward in Canada and elsewhere in areas such as labeling, advertising, childproofing, dosages, and so on. The advantage is that none of these regulations are LXRP’s responsibility. The company provides the technology that is used with the product but it is not their product.
- It is important to remember, early adopters in a new industry don’t always represent the eventual market. The ultimate recreational user will be looking for a “glass of wine” experience. They want a product that will deliver quickly without the cannabis taste and odor detracting from their enjoyment of a cookie, beverage, chocolate or candy or other edible product. The company is not aware of any technology delivers this as well as DehyrdraTECHTM.
- LXRP is not aware of any technology that can compete with DehydraTECHTM. A lot has been reported about “nano” technologies. Generally speaking, this is an older technology that was developed in 1980’s and 1990’s for the pharmaceutical industry. As a result, the patents are normally close to running out compared with LXRP’s patents that are new. Without question, the industry will be competitive but management is confident in the full suite of benefits DehydraTECHTM offers.
- In response to a direct question regarding the National Research Council of Canada (NYSE:NRC) and the collaborative research working being done, management admitted it has gone more slowly than expected. The NRC’s goals are not always as commercial at the outset but the next round of work will be addressing more of the questions LXRP is interested in.
Lexaria has been a favorite of mine for some time. Back in November 2017, after the shares had a run up from around $.30 to $.75 per share, I published an article on Seeking Alpha titled “If You Missed Some of Lexaria’s Gains don’t Miss them All. (read article here) The message was I wasn't sure why you still didn’t own it but it’s not too late, in my opinion. With the stock trading recently in the range of $2.75 per share, I feel the same way.