During the last month, Lexaria Bioscience Corp. (Nasdaq: LEXX) has come under significant pressure and we believe the recent activity has created a great opportunity.
Completes Batch Manufacturing
Last week, Lexaria reported to have completed the batch manufacturing of DehydraTECH™-processed cannabidiol (CBD) and placebo materials for its upcoming US Phase 1b hypertension clinical trial. The company used a contract manufacturing organization to produce these materials in a way that complies with current Good Manufacturing Practice (cGMP) regulations as mandated by the FDA.
Lexaria still needs to complete a few steps for its upcoming Investigational New Drug (IND) filing to the FDA and we are confident in the management team’s ability to execute. Although the company’s five previous human clinical studies were not conducted under FDA-registration, they are integral to the filing and review of its upcoming IND submission.
When Lexaria reported to have completed batch manufacturing of DehydraTECH™-processed CBD and placebo materials, it also announced the closing of a $2 million public offering. We expect the proceeds to support the advancement of this study and will monitor how this part of the business evolves.
Finishes Dosing Patients
A few weeks ago, Lexaria announced a major milestone and announced that it completed the dosing of 36 subjects in its human clinical oral nicotine study. The study represents the culmination of several years of work performed by Lexaria on oral nicotine formulations as an alternative to vaping or smoking.
Although the development was significant, the stock dropped considerably lower on the announcement. We believe the market does not appreciate the significance of this achievement and are now even more bullish on the company. The completion of the dosing process could accelerate the commercial adoption and distribution of Lexaria’s patented DehydraTECH absorption technology and we believe this could be a major revenue generator for the company.
DehydraTECH has generated interest from major multi-national conglomerates and Lexaria has been able to form licensing agreements for it with Fortune 500 companies. Going forward, the company plans to expand the commercialization process by forming licensing agreements and partnerships with other global companies and we consider this to be a testament to the efficacy of the technology.
We believe the completion of the dosing process will serve as a catalyst for the strategic relationships Lexaria has for commercial opportunities. We believe the market is not assigning enough value to the commercial aspect of the business and want our readers to be aware of this. Over the next year, we expect the company to report advancements on the commercial side of the business and believe this is an attractive growth opportunity.
Trading at a Considerable Discount
During the last month, Lexaria has reported a series of milestones and we are impressed with how the business has advanced. We consider Lexaria to be a company with several major growth catalysts and believe the market is undervaluing the business.
At current levels, we find the valuation to be compelling and the risk-reward profile to be favorable. From advancing clinical trials to strengthening its intellectual property (IP) portfolio, Lexaria has been nothing short of an execution story. We are favorable on how the story has advanced and believe the stock has considerable upside potential.
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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