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Dear Shareholders,
Will anyone ever forget 2021? If a global pandemic and unprecedented weather events don’t resonate, then perhaps the tectonic changes in politics or social involvement in investing epitomized with GameStop might register. Against this constantly shifting backdrop,
First, it may be useful to state Lexaria’s key area of focus: improving our understanding of the capabilities of the ground-breaking DehydraTECHTMdrug-delivery technology to enhance our abilities to commercialize and profit from this technology platform. Our applied R&D programs are designed toreduce future risksof both commercial and regulatory failure by identifying weaknesses as early as possible; and to enhance the likelihood of future commercial and regulatory success by thoroughly understanding strengths and capabilities, also as early as possible. As our data sets expand, they provide answers to many of the questions we expect to face from potential commercial partners, or from regulators, as we seek to advance those commercial pursuits.
DehydraTECH is not an EVOLUTION of existing technology – it is a REVOLUTIONARY new drug delivery platform. Expecting entire industries to change overnight to adopt a revolutionary new process is not realistic: it takes time, evidence, and a lot of positive results to overcome industry inertia. We have long been hopeful that, before the end of 2022, we will have built sufficient data to effect meaningful industry and/or regulatory progress and sustainable increases in valuation. Is 2022 the year that
Shareholder/Market Achievements
As has been true for many years, I continue to be the largest shareholder of
In the following discussion and details about shareholders, some supportive explanation is required. NOBO shareholders are “Non Objecting Beneficial Owners”: these are those of you who have permitted your identity to be known to us. OBO shareholders are “Objecting Beneficial Owners” and we, as a company, do not have access to your identity through the normal data suppliers. For OBO shareholders, we only have summary data of how many shareholders object to having their identity known, and collectively, how many shares they own together.
Our NOBO shareholder list currently covers 9,773 shareholders collectively owning 4.39 million shares and we have updates to much of that data, every day. We can and do follow trends and try to ensure that we are satisfying your needs.
Since listing on Nasdaq, we have witnessed an unusual phenomenon, namely the substantial increase in new shareholders who hold very small securities positions. We currently have over 600 shareholders who own 1 single share each; over 3,300 shareholders who own 10 shares or less; and an amazing 7,200 shareholders who own 100 shares or less.
At the other end of the scale, we have relatively few shareholders with large positions. We only have about 50 shareholders who own 10,000 shares or more; over 100 shareholders who own 5,000 shares or more; and about 650 shareholders who own 1,000 shares or more. Because of the small numbers of shareholders with large positions, it is easy for us to track changes even on large volume days.
In January of 2021, each of our 8,352 NOBO shareholders owned an average of 142 shares. By July of 2021, our 9,594 NOBO shareholders owned an average of 389 shares each. And in
As 2021 progressed, our number of shareholders has increased, and the average number of shares owned per shareholder has increased by 216%. These are positive trends showing accumulation and general approval of Lexaria’s business plans.
The institutional shareholders who participated in our
Another interesting trend we’ve noticed that seems to fly in the face of logic, is that during those several days of the year when we’ve had manic trading – days when we have traded more than 10 million to over 50 million shares in a single day – the actual turnover in our NOBO list is generally not more than a fraction of what you might expect. In other words, on those days when we’ve traded over 40 million shares in a day, we might only witness a couple hundred thousand shares actually changing hands in our NOBO list. It has always made us wonder “where are all those shares coming from?” And to this day, we have been unable to answer that question.
I want to say to all of our
Judging from the increased number of shareholders as well as the increased quantity of shares owned, on average, more of you would agree with our plans and progress than disagree.Currently, we estimate that about 12,000 shareholders collectively own all of our 5.9 million shares.
Capital Markets
2021 began for
Another goal for 2021 was to escape what had earlier been a perpetual “hamster wheel” of corporate finance activities. In previous times the Company had generally struggled in locating sufficient working capital to pursue its objectives as rapidly and effectively as it wanted to. That era ended in
We also raised approximately
As we look towards 2022 and 2023,
Stock Performance
One area where
We experienced inexplicably manic trading days in May, July and December when a quantity of shares equal to many times more than 100% of all our outstanding shares traded in a single trading day and, despite intraday price spikes reaching 52-week highs, there was little net change in value by the end of the day. While we cannot explain what seems at times as manipulative trading activity, rest assured that
That said, it was a very difficult year across the broad biotech sectors, with most biotech companies losing value during the year. The SPDR biotech ETF, XBI, started the year at
LEXX opened for trading on the Nasdaq near
In part to address this, we recently approved the largest marketing plan in the Company’s history, designed to ensure the public is aware of Lexaria’s achievements in 2022; and, we have three major applied R&D studies that will launch and complete this year as well as many smaller programs. We expect that, if we have positive results, these study results could be enough to bring important industry relationships that could see us one big step closer to commercialization and revenues – obviously, this is tightly connected to our capital markets strategy in that we hope to take important steps towards commercial relationships in the year to come.
We will also be pursuing a pre-Investigational New Drug(“IND”) meeting with the
Research & Development
Theresultsfrom our R&D can never be known in advance, but theinitiationandprogressionof our R&D programs are within our control, and this is the aspect of 2021 of which we are most proud. Remember, our R&D efforts to date have largely been conducted to reduce or remove risks and to establish whether DehydraTECH is capable of being applied in broad use within the pharmaceutical industry. Meaningful national or international implementation of DehydraTECH is unrealistic prior to full knowledge and understanding of its limitations and capabilities.
Our R&D focus for 2021 was to investigate DehydraTECH CBD for possible hypertension and heart disease applications; to further our knowledge of DehydraTECH nicotine as a replacement for damaging and deadly lung-based absorption methods; and to learn whether DehydraTECH would be compatible with antiviral drugs. We were successful in each of these primary areas of investigation.
Hypertension and Heart Disease.
Our biggest area of investigation in 2021 was CBD for hypertension and heart disease, and we enjoyed a very successful year in this regard. Our first human study of the year, HYPER-H21-1, confirmed and built upon results we obtained in our 2018 human clinical study. This year we evidenced that human blood pressure (“BP”) dropped within minutes of swallowing DehydraTECH-CBD capsules, after just a single dose.
In our HYPER-H21-2 follow-up study which administered 3 doses of DehydraTECH-CBD and monitored the volunteers over a 24-hour period, we witnessed even more impressive results.At selected times during the 24-hour study, volunteers with mild to moderate hypertension averaged as much as a 20 mmHg (i.e., 23%) decrease in BP relative to placebo. This is a large response after a single day of dosing and we were very encouraged by these results. For many existing prescribed blood pressure medications, similar decreases in BP are only apparent after many days or even weeks of dosing. Over the 24-hour ambulatory monitoring period, volunteers averaged a significant reduction of 7.0% in systolic pressure with DehydraTECH-CBD relative to placebo (p < 0.001).
In this same study, we also demonstrated with statistical significance for the first time that DehydraTECH-CBD reduced arterial stiffness in our human volunteers.Arterial stiffness is a strong predictor of many aspects of human disease and reducing it could lead to additional FDA regulatory findings as well as assist
This was one of our most important achievements of the year, which we feel evidences sufficient improvement in BP reduction to justify our ambitions within the regulated drug markets. In large part because our de-risking studies have been so positive, we formally announced our intention to pursue an IND filing with the FDA specifically for the purpose of developing DehydraTECH-CBD as a prospective registered treatment for hypertension and heart disease. That process is underway and will commence with a pre-IND meeting with the FDA in order to define our path to IND filing thereafter, and we expect to have an update within the next several months.
Beginning in
Nicotine.
In
DehydraTECH was originally developed to promote more efficient delivery of fat-soluble drugs across the intestinal wall, so our findings demonstrating its effectiveness also in enhancing sublingual/buccal (oral) absorption greatly enhances the value proposition for our technology for the oral nicotine products sector. This nicotine study was noteworthy not just because we delivered much higher levels of nicotine, more quickly; but also because we made this breakthrough utilizing buccal tissues of the mouth, gums and throat instead of through our traditional delivery through the intestines.
This was yet another opportunity demonstrating the versatility of DehydraTECH to work effectively in different parts of the body and opens doors to drug delivery through products such as lozenges, sub-lingual tablets, and other forms of non-swallowed oral products.
Because of this importantnewdiscovery for DehydraTECH, we are launching a very similar study in humans expected to start soon. If we can demonstrate similar performance of nicotine absorption through the sublingual/buccal tissue in humans, we feel that DehydraTECH will have advanced another big step in the direction of commercial applicability.
Antiviral.
Another area of significant advancement in 2021 was with antiviral drugs. We successfully demonstrated, for the first time ever, that DehydraTECH enhances delivery characteristics of certain antiviral drugs. This opens an entirely new class of drugs for investigation of applicability with DehydraTECH and helps to open long term business strategies that go beyond our core competencies with cannabinoids and nicotine. To date we have evidenced that DehydraTECH improves the delivery of each of the following drugs into animal bloodstreams: darunavir, efavirenz, remdesivir, ebastine, and colchicine; all of which are known to possess various antiviral properties.
We commissioned a study to evaluate DehydraTECH with the live SARS-CoV-2 virus.This study was performed using a primate cell line, VERO-E6, and conducted by a leading independent, USbiosafety level 3testing laboratory that delivers critical services to government and commercial customers.We learned that bothremdesivir and ebastine (known to have poor aqueoussolubility and compromised intestinal absorption and bioavailability when administered orally) processed with DehydraTECH were effective at inhibiting the COVID-19 SARS-CoV-2 virus using anin vitroscreening assay in infected cells in
We haven’t confirmed much additional antiviral work in 2022 – this is not due to a lack of interest but instead simply because we are maximizing our financial and human resources towards other pursuits in 2022 that we feel are closer to commerciality. We are very encouraged by our antiviral progress in 2021, however, and we feel that it has demonstrated the tremendous flexibility of DehydraTECH to be applicable across a breadth of drug classes worthy of further investigation.
Seizure Disorders.
Beyond our key advancements described above, we also indicated in 2021 our intention to pursue expanded development opportunities for our DehydraTECH-CBD program. Lexaria is a global leader in conducting CBD research and we have completed more work in this field than many companies 20 times our size. Before the Spring of 2022 we expect to launch a complex animal study evaluating DehydraTECH-CBD as a potential treatment to inhibit seizure activity in animals. This, of course, is the same field where the former GW Pharmaceuticals had so much success and was able to achieve FDA certification for its version of CBD medication (Epidiolex®) in treating certain pediatric seizure disorders. Epidiolex® is thought to be currently generating about
Although Epidiolex® enjoys regulatory exclusivity for its noted medical conditions, some of its exclusivity provisions are nearing expiration. We believe, therefore, that studies like those
Other R&D Advancements.
Throughout 2021,
We also learned that DehydraTECH was remarkably stable in consumer beverages and that one year after production, bottled consumer beverages contained a remarkable 93.4% potency of CBD. We also showed less than 1% variability of CBD potency within the beverage, a concept of critical importance when delivering drugs in an aqueous solution.Beverages containing cannabinoids often need to be shaken prior to use and tend todegrade over time, sometimes dramatically. There have been reports of beverages sold that contain only a tiny fraction of thecannabinoids listed on the product label, whether due toinadequate manufacturingtechniques ortime decay. Lexaria’s data demonstrate exceptional effectiveness in integrating CBD into Ready-to-Drink (“RTD”) beverages in a stable and homogenously distributed manner over time without the need for physical mixing or agitation before consumption.
In 2018 we hired a third-party lab that evidenced that DehydraTECH was also capable of enhancing the delivery of cannabinoids across human epithelium (“skin”). While we have not yet pursued skin-based delivery markets, we have good early evidence of effectiveness. This is yet another area we are actively working on as it could open additional commercial pathways both in the regulated drug industry as well as with consumer goods. We have several prospective commercial clients that are indicating their desire to introduce their new skin-based products utilizing DehydraTECH to the market in Q2 or Q3 this year.
In a tetrahydrocannabinol THC pharmacokinetic (“PK”) study we also demonstrated that DehydraTECH-processed THC was three times faster (15 minutes vs. 45 minutes) to deliver the same amount of THC into the bloodstream than generic THC. The DehydraTECH-processed THC also reached maximum blood saturation levels 2.5 times higher than the generic THC. Rapidity of action is particularly desired by customers of psychotropic drugs.
R&D Summary.
During 2022 we are planning to enter the FDA IND pathway for DehydraTECH-CBD for hypertension as our first drug application.
We are launching three major studies in the March-April period: the 6-week human hypertension study (CBD); the animal seizure study (CBD); and the human sublingual/buccal tissue study (nicotine). Results from these studies are expected by early Summer to Fall. We will also be conducting a number of smaller studies throughout the year and will announce those when appropriate. All of our 2022 work is funded through existing resources, so we have no need to raise capital to complete this work.
Please make note: the COVID-19 pandemic is not over, and we hope you will grant us a little patience if any of our R&D investigations experience any delays in volunteer recruitment, or study execution. We do our best, but delays are possible.
The goal of our three major studies is to generate sufficient data to support either regulated IND-type applications; or to stimulate corporate partnering within their appropriate market sectors. We are optimistic of positive results – noting that science can be unpredictable – and, if so, expect 2022 to be our most exciting year ever!
Multiple Shots on Net in Huge Markets
We are currently pursuing or investigating several large market opportunities, thesmallestof which is currently generating over
Size | Future Size | |||
DehydraTECH Markets | US $bn | Year | US $bn | Year |
Tobacco | 786.1 | 2022 | 908.3 | 2026 |
Nicotine Replacement | 59.8 | 2022 | 147.9 | 2028 |
CBD | 4.1 | 2022 | 111.8 | 2030 |
Cardiovascular Drugs | 96.1 | 2022 | 107.8 | 2025 |
Antivirals | 55.6 | 2022 | 66.7 | 2025 |
Epilepsy | 10.6 | 2021 | 16.6 | 2031 |
Human Hormones | 5.4 | 2022 | 13.0 | 2026 |
PDE5 Inhibitors | 4.9 | 2022 | 6.0 | 2025 |
Vitamin D3 | 1.2 | 2022 | 1.7 | 2026 |
Commercial Results
I’m often asked about well understood “normal” business metrics such as revenues, numbers of clients, and other similar aspects of our business. We had our highest ever revenues in 2021 of over
Notwithstanding, we don’t place a lot of relevance, yet, on our revenue numbers. That might seem counterintuitive, but upon reflection most people agree that is a reasonable comment. For the most part, our revenues to date are “proof of concept” or early-stage revenues: they show that we are able to gain and retain commercial clients willing to pay to use our technology, and that our DehydraTECH technology is available in the marketplace. But, given the early-stage nature of many of our clients, it is nearly impossible to build any type of reliablerevenue model. Their revenues are expected to fluctuate widely, and as a result ours likely will too.
Lexaria’s current clients are small companies anxious to establish themselves. They have worked hard – and we are delighted for them and their successful distribution in over 7,000 stores across America, including many well-recognized chains such as
And while important, these current revenue streams are not Lexaria’s main area of business focus. We are focused on larger national and international applications for DehydraTECH, primarily but not entirely in the pharmaceutical sector. These are our areas of interest that we expect will provide significant revenue streams over time; but they have not yet begun.
The reason we spend so much time and resources on validating R&D programs, is to make our technology more attractive for large national and international consumer products companies and pharmaceutical companies. We know we have to provide copious amounts of data to satisfy the needs of the largest companies in their industries, and that these companies are naturally risk averse. We also expect that, if we do have success with these larger organizations, the commercial ramifications for
For example, many national or international corporations do not participate in new business segments unless they can be assured of multi-billion revenue potential. For large companies with sales of
Furthermore, any out-licensing transactions
Thus, while we are grateful for our smaller clients and will continue to support those we have and work to gather more of them, a single larger client would quickly eclipse many years of growth of our smallest clients. Given that there are many regulated drugs that each enjoy annual revenue of more than
Intellectual Property
Within the vast market in
We expect additional patents to be awarded in 2022 although we acknowledge that the biggest growth in DehydraTECH-related IP is likely already achieved and solidified behind our patent portfolio.
Summary
Management of
We will continue working to advance our shorter-term business interests and meaningfully increase the modest revenue streams currently being generated. But we caution against applying undue reliance on those operations at this early stage in the Company’s life. If we do not deliver higher revenue numbers, that is not particularly relevant to our primary business focus. If we do deliver higher revenue numbers, let’s celebrate!
Before 2022 ends, we expect to have at least one major regulatory advancement such as an IND program approval, or one major new industry partner. We believe either of those will support what could be significantly higher valuations. If we are able to achieve more than one of these advancements…..so much the better.
Hundreds of you know me. You know I can’t tell the future or forecast things outside of my control. But you also know that I and the
The Company is not making any express or implied claims that it has the ability to eliminate, cure or contain COVID-19 (or the SARS-CoV-2) virus.
About
Lexaria Bioscience Corp.’s patented drug delivery technology, DehydraTECH™, improves the way active pharmaceutical ingredients (APIs) enter the bloodstream by promoting more effective oral delivery. Since 2016, DehydraTECH has repeatedly demonstrated the ability to increase bio-absorptionwith cannabinoids and nicotineby 5-10x and, in some instances with cannabinoids by as much as 27x compared to standard industry formulations, reduce time of onset from 1 - 2 hours to minutes, and mask unwanted tastes; and is also being evaluated for orally administered antiviral drugs, non-steroidal anti-inflammatory drugs (NSAIDs), PDE5 inhibitors and more. DehydraTECH has also evidenced an ability to deliver some drugs more effectively across the blood brain barrier.
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This press release includes forward-looking statements. Statements which are not historical facts are forward-looking statements. The Company makes forward-looking public statements including but not limited to: its expected future financial position, results of operations, cash flows, financing plans, research and development, business strategy, products and services, competitive positions, growth opportunities, plans and objectives of management for future operations, including statements that include words such as "anticipate," "if," "believe," "plan," "estimate," "expect," "intend," "may," "could," "should," "will," and other similar expressions that are forward-looking statements. Such forward-looking statements are estimates reflecting the Company's best judgment based upon current information and involve a number of risks and uncertainties, and there can be no assurance that other factors will not affect the accuracy of such forward-looking statements. Factors which could cause actual results to differ materially from those estimated by the Company include, but are not limited to, government regulation, managing and maintaining growth, the effect of adverse publicity, litigation, competition, scientific discovery, the patent application and approval or rejection process and other factors which may be identified from time to time in the Company's public announcements and filings. There is no assurance that existing capital is sufficient for the Company's needs or that it will be able to raise additional capital. There is no assurance the Company will be capable of developing, marketing, licensing, or selling products containing cannabinoids, nicotine or any other active ingredient or drug. There is no assurance that any planned corporate activity, scientific research or study, business venture, technology licensing pursuit, patent application or allowance, consumer or scientific study, or any initiative will be pursued, or if pursued, will be successful. There is no assurance that any of Lexaria’s postulated uses, benefits, or advantages for the patented and patent-pending technology will in fact be realized in any manner or in any part. The Company is not obligated to update this article in whole or in part, and every reader should rely only on the Company’s official filings with the
INVESTOR CONTACT:
ir@lexariabioscience.com
Phone: 250-765-6424, ext 202
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