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Lexaria Continues to Execute and Strengthen its Balance Sheet

Dec 13, 2016 • 12:19 PM EST
6 MIN READ  •  By Michael Berger
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The Canadian cannabis industry has made significant strides over the last year and although licensed producers have been in the spotlight, other companies have also benefited from this movement.

One company we have been watching is Lexaria Bioscience (LXRP) which is levered to the North American cannabis industry. Over the last few months, Lexaria has announced several developments that have the company well positioned for growth throughout 2017.

During the last few months, Lexaria has improved its fundamental story through the following developments: 1) The company was issued its first patent from the U.S., 2) Lexaria has entered into several agreements and letters of intent, 3) During the last quarter, the company entered into its first private label agreement, and 4) The company’s cash position has improved significantly and after raising over $1 million in the last quarter it will be able to execute on its operating plan. 

Issued a Patent in the United States  

In late October, Lexaria announced that it has been issued United States Patent No. 9,474,725, Cannabinoid Infused Food and Beverage Compositions and Methods of Use Thereof, pertaining to Lexaria’s method of improving bioavailability and taste of certain cannabinoid lipophilic active agents in food products.

Its first patent granted or awarded by the United States Patent and Trademark Office (USPTO) was a significant milestone for the company. The patent protects Lexaria’s intellectual property related to the primary focus of its business, the infusion of cannabinoid compounds in edible products.

Lexaria’s technology makes cannabis edibles taste better and makes the active ingredients enter the bloodstream more quickly and much more effectively.

Under this issued patent, Lexaria has two continuation applications with the USPTO to allow its remaining patent claims still under pursuit. Lexaria has seven other patent applications pending in the U.S. and abroad and believes it is well positioned for the allowance of these additional patent claim sets.

Patent Better Positions the Company in Agreements

The issuance of a patent from the USPTO further strengthens Lexaria’s positioning in any potential agreements. Prior to the issuance of a patent from the USPTO, Lexaria had completed two definitive agreements and issued two letters of intent for licensing its technology.

In November, the company announced two more agreements. The first was a MOU to establish a joint venture with Canadian public company Neutrisci International (NU: TSX Venture) to produce and sell a line of healthy edible cannabinoid products. Neutrisci has established a solid base of retail exposure for its existing tablet-format non cannabinoid products.

One week later, Lexaria announced announced a letter of intent for the licensing of its proprietary absorption and palatability enhancing technology to Hempco Food and Fiber Inc. (HEMP: TSX Venture). Hempco is a trusted and respected pioneer, innovator and provider of premier hemp seed foods for more than 15 years. The company has customers all over North America, Europe and Asia. Lexaria is working with Hempco to assist with flavor improvements and delivery of various payload molecules.

These announcements are a testament to the significance of the patent issuance as it clearly strengthens Lexaria’s position in potential deals and accelerates the potential for additional future agreements.

Agreements Setting Lexaria Up for Growth

2016 has been a banner year for Lexaria. In May, the company signed its first definitive agreement to license its technology to a Colorado cannabis chocolate company.

In early August, Lexaria announced a letter of intent to license its technology to a company working with American Indians across the United States. The company also announced a letter of intent with an unnamed but established cannabis chocolate and edibles brand in California.  According to Lexaria, the potential licensee is a very well-known brand in California, and formulation and consumer evaluation studies are ongoing.

In September, Lexaria announced that it entered into its first private label agreement and a definitive technology out-licensing agreement with Timeless Herbal Care. Timeless plans to market and distribute its products across North America and Jamaica.

Although Lexaria needs to begin converting these agreements into paying long-term relationships, the company is well positioned for future growth.

An Improved Cash Position

Earlier this month, Lexaria received more than $700,000 in cash as a result of the early exercise warrant incentive program announced on October 27th.

The company said that 3,245,000 warrants were exercised at $0.2273 and Lexaria issued 3,245,000 common shares and 3,245,000 warrants with an exercise price of $0.2273 to buy one additional common share. These warrants are set to expire on May 14, 2017.

Lexaria will be using the gross proceeds to continue to build its intellectual property portfolio and to expand its commercialization activities in technology out-licensing and product sales.

In late August, Lexaria closed the final tranche of its fully subscribed private placement equity financing. The company raised $196,000 in gross proceeds and these funds will be used to continue deployment and marketing of hemp based food products, for investor relations, for G&A and for general working capital.



Important Investor Disclosures 

Disclosure.  Compensated Affiliate.  This report was authored by and is property of StoneBridge Partners LLC.  All information and data relied upon in drafting this report is publicly available.  The author believes and considers its sources to be reliable, but does not guarantee the accuracy or completeness of any information contained in this report.  Any and all information, data, analyses and opinions are provided for informational purposes only and is not intended, in any manner, as investment advice.  Any projections or other information generated by StoneBridge Partners LLC regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results.  None of the material contained in this report is intended as a solution or offer to sell or purchase a specific stock or any other investment.  This report is not directed to, or intended for distribution or use by, any person or entity that is a citizen, resident or located in any municipality, state, country or other jurisdiction where the distribution, publication, availability, or use of this report is contrary to any governing law or regulation.  The securities discussed in this report may not be eligible for purchase and/or sale in certain jurisdictions or by particular individuals.  It is important that you check any and all governing laws and/or regulations that may be applicable in your jurisdiction.  Investing in securities of issuers organized outside of the United States, including ADRs, entail certain risks.  The securities of non-United States issuers may not be registered with, nor be subject to the reporting requirements of the United States Securities and Exchange Commission.  Please contact a Financial Advisor for professional advice regarding any and all securities investments.  This report is intended for informational purposes only.  StoneBridge Partners LLC’s officers, directors, employees, affiliates, or subsidiaries may have positions in securities covered by StoneBridge Partners LLC.  StoneBridge Partners LLC receives compensation from the company and/or has a position in the securities mentioned in this report

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Authored By

Michael Berger

Michael Berger is Managing Partner of StoneBridge Partners, LLC and Founder of Prior to entering the cannabis industry, Michael was an Equity Research Analyst at Raymond James Financial covering the Energy Sector. Michael has been featured in publications such as The Street, Bloomberg, US Money News, and hosts various cannabis events across North America.