Today, we are lucky to have Lexaria Bioscience CEO Chris Bunka with us. During the last year, the biotech company has reported a series of positive developments and we are bullish on the direction the business is heading. We believe Lexaria Bioscience is flying under the radar and hope this interview can help answer the questions that our readers have.
- Can you please tell our readers about Lexaria Bioscience and the vertical the business is focused on?
Lexaria’s DehydraTECH® technology helps many drugs absorb more quickly and efficiently into the body. Given that it is a platform technology, it works with many different fat-soluble drugs, which explains how and why we are in so many business verticals. Said simply: we try to find applicability wherever the tech demonstrates its effectiveness. So far, we have shown that in cannabinoids, oral nicotine, antiviral drugs, phosphodiesterase inhibitors, and more.
Once we establish effectiveness with a molecule, then we look at applications for that molecule. Since DehydraTECH was first established for use with cannabinoids, think about all the applications for those cannabinoid molecules – I mean, sure it includes all sorts of “retail” use, but it also includes registered drug product use such as Epidiolex® has demonstrated. And that CBD-based drug, by the way, could quite possibly generate $1 billion in revenue in the next twelve months with profit margins that the recreational cannabis industry could only dream of.
Lexaria may be the only company in the world that has demonstrated that once CBD is processed with DehydraTECH, it lowers human blood pressure. We’ve completed five human clinical trials to establish this. Generic CBD does not seem to have the same effect. So we are investigating FDA registration for DehydraTECH-CBD for the purposes of treating hypertension, as just one example.
Improve drug delivery is the vertical: the applications are widespread.
- What has been the company’s strategy as it relates to intellectual property (IP) and patents?
Because our technology is so novel, we have been very successful in obtaining 28 patents so far, all over the world. We are currently patent-granted in Canada, the USA, Mexico, the EU, India, Japan, and Australia. We also have patents pending in all those countries, and many more.
Our IP strategy is simple: we protect our IP and our shareholders by obtaining patent protection as widely as we can as an early part of our commercial strategy. We feel we are building longer term value by not entering markets prematurely, prior to suitable patent protection. Of course, patents are not the only type of intellectual property protections, as Jazz (formerly GW Pharma) has demonstrated with its CBD drug Epidiolex. Once a new drug product like Epidiolex is registered with a national regulator with the FDA, a period of commercial exclusivity is granted to that drug. This prohibits copycat attempts by others, and if DehydraTECH-CBD is eventually granted registration rights by the FDA, for example, for hypertension, then Lexaria will have added that additional layer of intellectual property protection.
- The recent appointment of Julian Gangolli as a strategic advisor is significant. What will his focus be with the company?
Yes, Mr. Gangolli’s appointment to Lexaria is significant. He was the President of GW Pharma USA from 2015 until it was acquired by Jazz Pharmaceuticals for $7.2 billion. Julian was at the helm while Epidiolex® was weaving its way through the FDA registration process, so he obviously has expertise that he can offer to Lexaria, related to that regulatory process. But he also understands the commercial aspects of introducing a new drug to a market, and he can be instrumental in assisting Lexaria with our commercial pursuits which will increasingly be our focus going forward. We are really fortunate that he has agreed to join us and I think he will be of real value to us in 2023 and beyond.
- During the last few years, the company has formed strategic partnerships with several major multi-national corporations. Can you tell our readers about these relationships?
Unfortunately, I cannot provide too many details. Most of the multi-billion dollar companies we are in discussions or technological examinations with, have asked us not to identify them publicly. In general, there are two types of companies that we are in discussions with; either CPG (consumer packaged goods) or pharmaceutical.
It is quite well known that we entered our first license agreement with Altria, the largest tobacco company in the US, back in 2018. We’ve also done some work with them this year wherein we manufactured some DehydraTECH nicotine powders for their examination. I’m not aware of the status of their review. We are in similar relationships with other companies in that same industry that are also reviewing our technology. Personally, I think that the results from Lexaria’s ongoing human clinical oral nicotine study could be instrumental in influencing the decision process of one or more of those companies. We are expecting to complete that study in February and hope to have results in March, 2023.
In 2022 we began our first relationships with the pharmaceutical sector, and we currently have discussions ongoing with a couple of those companies. In this sector, the due diligence is much more intense and requires many, many months to complete. It includes many aspects of scientific investigation and can even include internal proprietary studies.
As of the date of this interview, none of those companies have “walked away from the table” and we continue to progress through discussions. It is impossible to predict outcomes from these sorts of relationships since those outcomes are not up to me: other people are making decisions based on their own corporate needs, budgets, priorities, and so on. So it takes time and patience but the progress is ongoing. Due to the small size of Lexaria, and the large size of many of these companies, nearly any commercial agreement that might be reached would be material to Lexaria and as such, we would be announcing it if and when it goes into effect.
- What are some of the most significant potential catalysts for Lexaria Bioscience?
We have a busy year ahead. During the first calendar quarter of 2023 we are expecting results from our human oral nicotine clinical study; from an animal diabetes study examining DehydraTECH-CBD; and from an animal dementia study also examining DehydraTECH-CBD. We also hope to announce at least one new business relationship during the first quarter.
During the first and second quarters of the year, we expect to have news related to our ongoing preparations for our FDA, IND filing related to DehydraTECH-CBD for hypertension. We are currently hoping to submit that file to the FDA around July or so. We had a successful pre-IND meeting with the FDA in July of 2022 and have continued to work on that submission ever since.
We are also hopeful that one of our existing commercial partners, Premier Wellness in Japan, will be introducing their first commercial DehydraTECH-CBD consumer products in Japan by the third quarter of 2023.
We will have a variety of other catalysts during the year in our normal course of business.
- We believe biotech companies should be valued on data from pre-clinical and clinical trial studies? Based on our belief, we consider Lexaria Bioscience to be undervalued. Can you provide more insight on how biotech companies should be valued?
Generally speaking, as a company progresses from pre-clinical work to more advanced clinical phases, the value of that company would logically increase. The FDA provides good guidance on the phased drug-investigation process. Lexaria is currently in pre-clinical work on several different initiatives, such as the investigation of DehydraTECH-CBD for each of diabetes and dementia.
Actual numeric valuation of a company is of course provided every day by the marketplace. One would logically presume that a potential drug that is therapeutically competitive within its class, but has application to a $5 billion market need, would be valued more highly than one that has application to a $500 million market need.
Actual valuation is going to depend on market need, market size, drug efficacy, side effects (or “adverse events”), corporate ability and much more. During the last week of December, a company called Kala Pharmaceuticals announced that the FDA had accepted Kala’s investigational new drug application (IND). This is the same type of FDA-approval that we expect to be applying for this summer. In Kala’s case, the market responded very favourably, lifting that stock from $4 before the announcement, to over $50 several days later. The stock has since settled in around $16.
Given that other companies have experienced nearly zero change in valuation upon reaching this milestone, the valuation question is obviously complex and dependent upon many, many factors. So I caution people to understand that each company is unique. That said, I’ve read an analysis that showed a roughly 400-fold increase in valuation for a model biotech company from the beginning of a concept of a drug, to a potential valuation at the beginning of Phase 3 studies. That same model showcases roughly a 12-fold increase in valuation from the beginning of Phase 1 to the beginning of Phase 3 studies.
Will every company follow that valuation model? No. Every company is unique and distinct. But that said, it does seem logical that valuations should increase in general as scientific evaluation progresses and FDA commercial approval is closer to becoming a reality.
Given that Lexaria’s valuation today is only about 1/6th that of the “typical” valuation in that same model at the beginning of Phase 1; and given that we hope to receive our IND approval from FDA sometime in the middle of 2023, then yes, I also believe Lexaria is substantially undervalued at this time.
Company Relationship Disclosure
OTB is responsible for the OTB opinions provided in this disclosure except all sources or information provided by other parties were not verified or authenticated and OTB does not undertake to confirm or substantiate or be responsible for such information provided by other parties.
Any Content posted regarding a Profiled Issuer is not a solicitation or recommendation to buy, sell or hold securities. We cannot and do not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. All information should be independently verified. We are not responsible for errors or omissions in our publications, and any opinions expressed are subject to change, without notice. We do not, nor are we under any obligation to undertake due diligence or investigation or authenticate and verify whatsoever regarding Profiled Issuers or any Content posted in relation thereto and we do not receive any verification from the Profiled Issuer regarding the Content we disseminate. Similarly, while we endeavor to facilitate the provision of quality information, we are not responsible for any loss or damages caused or alleged to have been caused by its use nor verify or authenticate or update such information.
Pursuant to an agreement between Spotlight Media and Lexaria Bioscience we have been hired for a period of 30 days beginning January 9, 2023 and ending February 9, 2023 to publicly disseminate information about Lexaria Bioscience including on the Website and other media including Facebook and Twitter. We are being paid $2,000 per month by Lexaria Bioscience and were paid “ZERO” shares of unrestricted or restricted common shares. We plan to sell the “ZERO” shares of Lexaria Bioscience that we hold during the time the Website and/or Facebook and Twitter Information recommends that investors or visitors to the website purchase without further notice to you. We may buy or sell additional shares of Lexaria Bioscience in the open market at any time, including before, during or after the Website and Information, provide public dissemination of favorable Information.
This article contains forward-looking statements within the meaning of applicable securities laws. All statements that are not historical facts, including without limitation, statements regarding future estimates, plans, programs, forecasts, projections, objectives, assumptions, expectations or beliefs regarding future performance are “forward-looking statements”. Forward-looking statements can be identified by the use of words such as “expects”, “does not expect”, “is expected”, “believes”, “intends”, “anticipates”, “does not anticipate”, “believes” or variations of these words, expressions or statements, that certain actions, events or results “may”, “could”, “would”, “might” or “will be” taken, will occur or will be realized. Such forward-looking statements involve risks, uncertainties and other known and unknown factors that could cause actual results, events or developments to differ materially from the results, events or developments expected and expressed or implied in such forward-looking statements. These risks and uncertainties include, but are not limited to, dependence on obtaining and maintaining regulatory approvals, including the acquisition and renewal of federal, provincial, state, municipal, local or other licenses, and any inability to obtain all necessary government authorizations, licenses and permits to operate and expand the Company’s facilities; regulatory or policy changes such as changes in applicable laws and regulations, including federal, state and provincial legalization, due to fluctuations in public opinion, industry perception of integrative mental health, including the use of psychedelic-assisted therapy, delays or inefficiencies or any other reason; any other factor or development likely to hamper the growth of the market; the Company’s limited operating and profitability track record; dependence on management; the Company’s need for additional financing and the effects of financial market conditions and other factors on the availability of capital; competition, including that of more established and better funded competitors; the impact of the Russia-Ukraine conflict on the global economy; the continued impact of the COVID-19 pandemic; and the need to build and maintain alliances and partnerships, including with research and development companies, customers and suppliers. These factors should be carefully considered, and readers are cautioned not to place undue reliance on forward-looking statements. Despite the Company’s efforts to identify the main risk factors that could cause actual measures, events or results to differ materially from those described in forward-looking statements, other risk factors may cause measures, events or developments to materially differ from those anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in forward-looking statements. The Company does not undertake to revise forward-looking statements, even if new information becomes available as a result of future events, new facts or any other reason, except as required by applicable laws
