NEW YORK, February 6, 2018 /PRNewswire/ --

NetworkNewsWire Editorial Coverage 

With the expected legalization of recreational cannabis use in Canada just months away, the Canadian cannabis industry is experiencing a frenzied flow of capital that is only likely to accelerate. While this capital rush won't affect every company in the space, the overriding sentiment supports global aspirations and trickle-down opportunity for innovators like Lexaria Bioscience Corp. (OTC: LXRP) (CSE: LXX) (LXRP Profile). This unprecedented cash flow is already fueling the construction of the largest grow facilities the world has ever seen, as well as increasingly hectic merger and acquisition strategies undertaken by companies like MedReleaf (OTC: MEDFF) (TSX: LEAF), Aurora Cannabis, Inc. (OTC: ACBFF) (TSX: ACB), Cronos Group, Inc. (OTC: PRMCF) (TSX-V: MJN) and Organigram Holdings, Inc. (OTC: OGRMF) (TSX-V: OGI).

Reuters has reported that the value of cannabis deals this year has already reached $1.2 billion, more than double the total for 2017, which was itself a record (http://nnw.fm/14nLi). For these pioneers of pot, halcyon days lie ahead in 2018. For perspective, contrast Canada's revenue outlook with the U.S.-based Arcview Group, which bills itself as the largest cannabis-focused investment network in the world. It has taken Arcview members several years to raise a total of US$150 million, which is no small accomplishment in a country where federal cannabis regulations can still put you in prison, but not remotely competitive against the billions being raised north of the 49th parallel.

It may be inevitable that some portion of the billions of Canadian cannabis money find their way into either developing, licensing, or buying the technology necessary to dominate the rapidly developing global legal cannabis market, and Lexaria Bioscience Corp. (OTCQX: LXRP) (CSE: LXX) has positioned itself squarely in the midst of this trend.

Lexaria's Golden Nugget: Drug Delivery Technology

Innovators in the field of drug delivery engineer technologies to improve the targeting of therapeutic agents and their controlled release. In general, drug therapies have vastly enhanced Hippocratic practices but many come with pernicious side effects, since active agents very often cannot discriminate between healthy and unhealthy cells. Some others, although rather more benign, require large dosages or prolonged treatment since, with current delivery methods, much of the active agent is simply not absorbed by the body and goes to waste.

However, Lexaria has developed an oral digestion technology, DehydraTECH™, which improves the absorption rates of nicotine, non-steroid anti-inflammatory drugs (NSAIDs), vitamins and cannabinoids, by as much as five to 10 times. The significance of this edible technology is that this improved absorption may translate into lower dosages and shorter treatment regimens.

DehydraTECH also improves delivery times, delivering payload molecules to the bloodstream in 15-25 minutes, as opposed to 60-90 minutes for current methods. The new patented, disruptive drug delivery platform changes the way Active Pharmaceutical Ingredients (APIs) enter the body orally. The technology eliminates the need to add high concentrations of sweeteners, since it masks unwanted tastes. But, more importantly, it avoids first-pass liver metabolism, which mitigates side effects and improves the bioavailability of its client drug.

Ingestion of a medication, typically, follows a prescribed path. After the digestive system absorbs the ingredients, they are moved to the hepatic portal system en route to the liver. The liver, which among other things converts foods into the nutrients that can be used by the body, dutifully embarks on its routine of metamorphosis. Unfortunately, many therapeutic agents are neutralized in the process, which is why those that bypass the liver, using DehydraTECH for instance, tend to be more effective.

Edible Integration  

DehydraTECH has already proven its mettle as Lexaria has deployed the innovative delivery platform to its product line. This consists of distinct brands: ViPova and TurboCBD. ViPova is a delicious Chinese black tea from the province of Yunnan, made from hemp oil infused within dried evaporated non-fat milk. Introduced in January 2015, the tea is available in a variety of flavors. In addition, there is Lexaria's TurboCBD, a brand of technologically enhanced, high absorption hemp oil capsules that came to market in March 2017. TurboCBD's cannabinoid content is fortified with high-quality American ginseng and ginkgo biloba to support enhanced focus and memory while reducing stress and fatigue.

Lexaria's Engine of Growth is its Drug Delivery Platform 

Despite the refreshing range of products, what's under the hood matters more. Since the DehydraTECH technology can be used to improve the delivery of a wide range of substances, including ibuprofen, nicotine, fat-soluble vitamins, THC and CBD, this puts Lexaria in the enviable position of being a natural partner to cannabinoid biotech companies as their star rises, situated as an enabler rather than a competitor. Moreover, at present, Lexaria is the only company in the world that has been awarded a patent for the improved delivery (oral or ingestible, including capsules and pills) of all non-psychoactive cannabinoids.

Patents have been awarded in the United States and Australia and are pending in 40 more countries, as well as transnationally under the Patent Cooperation Treaty, as Lexaria's patent portfolio grows. The company has filed 19 patent applications that include both method and composition of matter claims. The patents issued in the United States and Australia include "Food and Beverage Compositions infused with Lipophilic Active Agents and Methods of Use thereof."

This puts the company in the unusually advantageous position of owning proprietary technology that can deliver a vast range of non-psychoactive cannabinoid-based drugs. Lexaria has already had discussions with major pharmaceutical and other Fortune 500 companies regarding its technology. The smallest deal with any one of these could increase revenues by over $1 million; the largest by much, much more, according to CEO Chris Bunka in a recent interview (http://nnw.fm/jY9gG). Moreover, Lexaria's licensing model will generate revenues at very little cost, leaving 90 to 100 percent of revenues as profit.

Key Developments  

On Jan. 25, 2018, Lexaria announced it had entered one such technology licensing agreement with Cannfections Group Inc., which produces cannabis-infused chocolates and candies (http://nnw.fm/qLBl3). Cannfections Group has been newly established by one of Canada's leading chocolate companies, which has over 85 years of experience in producing high quality chocolate and confectionary products. The parent company currently manufactures chocolate retail products for several leading international and domestic chocolate brands.

"By licensing our technology to Cannfections, Lexaria can now offer its commercial clients the expertise of one of Canada's oldest and most established chocolatiers utilizing next-generation DehydraTECH^TM technology," Bunka stated in the press release. "This is a long term strategic relationship meant to offer technology, value and expertise to Licensed Producers wanting to offer the highest quality chocolate edibles available in Canada once permitted under Health Canada regulations."

Canadian Cannabis Wheeling & Dealing  

Cannabis market leaders are providing their investors with unheralded liquidity while other leaders are hot on the investment and acquisition path. And in recent weeks and months, governments in Australia, Italy, the Netherlands, Germany and elsewhere have begun to open their markets to cannabis imports and exports for the first time in history, allowing for the beginnings of a global market in cannabis trade.

MedReleaf's (OTC: MEDFF) (TSX: LEAF) recent Initial Public Offering (IPO) of approximately $75 million is thus far the largest marijuana company IPO in North America. MedReleaf, the first and only ISO 9001 certified cannabis producer in North America, was founded just four years ago and is one of less than four dozen licensed producers and retailers of medical cannabis products in Canada. Its focus is on the supply of dried cannabis, cannabis oils, and cannabis oil capsules to qualified medical patients in Canada but it also sells various accessories, such as vaporizers and grinders. Earlier this month, the company released details of further possible capital inflows. It announced an agreement with Canaccord Genuity Corp. and GMP Securities L.P (http://nnw.fm/g1GgG) under which the two underwriters will purchase the company's common stock in a deal valued at C$100.7 million (US$85.8).

Some of that cannabis cash is also likely to pay for Aurora Cannabis' (OTCQX: ACBFF) (TSX: ACB) 800,000-square-foot state-of-the-art Aurora Sky project and help Canada's No. 2 marijuana producer take over smaller rival CanniMed Therapeutics Inc for C$1.1 billion (US$852 million). Aurora had originally made a hostile bid capped at C$24 (US$20.45) per share for CanniMed, but this new offer was priced at C$43 (US$36.64). The deal marked the world's biggest marijuana M&A transaction to date.

Meanwhile, the Cronos Group, Inc. (OTC: PRMCF) (TSX-V: MJN) is doing deals too. In January 2018, the company announced the closing of its C$46 million bought deal public offering (http://nnw.fm/Qdc3S), the proceeds of which the company has allocated toward expanding production capacity, research and development initiatives, and for general working capital purpose. Cronos Group is a geographically diversified and vertically integrated cannabis company that operates two wholly owned licensed producers (LPs) regulated under Health Canada's Access to Cannabis for Medical Purposes Regulations (the ACMPR) and holds a portfolio of minority investments in other licensed producers. The company's flagship LPs, Peace Naturals Project Inc. (Ontario) and Original BC Ltd. (British Columbia), are collectively situated on over 125 acres of agricultural, licensed land. Peace Naturals Project Inc. recently obtained a Dealer's License pursuant to the Controlled Drugs and Substances Act under Health Canada. This enables the Cronos Group, through Peace, to export medical cannabis extracts, including concentrated oil and resin products, internationally.

Organigram Holdings (OTCQB: OGRMF) (TSX-V: OGI) is also cashing in on investor optimism. The company made public its agreement with Eight Capital under which Eight Capital and others will purchase 100,000 convertible debentures at a price of $1,000 per debenture for a total of $100 million (http://nnw.fm/39euQ). The company said it intends to use part of the net proceeds of that offering to expand its domestic and overseas market presence.

Anticipated Supply Shortfall 

As legalization looms in Canada, investors are opening their checkbooks to a wide range of cannabis companies. With legalization, demand for cannabis is expected to surge. There are indications that, at present, a supply shortfall could occur. In the short term, it looks like a seller's market and the volume of funds flowing into the industry is clear evidence of that.

For more information on Lexaria, visit Lexaria Bioscience Corp. (OTCQX: LXRP) (CSE: LXX)

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