Lexaria Corp. (OTCQB: LXRP) (CSE: LXX), a relatively quiet $7 million Canadian company in the cannabis industry, recently came out with some groundbreaking lab results for its lipid-infusion technology designed to improve the absorbability of CBD, THC and other compounds.
The company released independent laboratory results that showed a substantial 499% increase in CBD permeability in human intestinal tissue using its commercially-available ViPova™ CBD-fortified black tea compared to raw CBDs. In addition, the researchers found a 325% increase in intestinal permeability when comparing its formulation to a simple mixture of black tea and CBDs, which demonstrates the effectiveness of its lipid-encapsulation technology.
“I am very pleased with the performance of our patent-pending technology in this carefully designed and controlled experiment,” said Lexaria Corp. President John Docherty. “This evidences the disruptive nature of Lexaria and its technology within the cannabinoid edibles industry, and poises the Company to become a leader in the development of potentially a wide range of product lines with enhanced gastro-intestinal absorption performance capabilities.”
The potential implications of the technology are enormous within the multi-billion dollar cannabis industry. Marijuana edibles manufacturers, such as Smart Ventures Inc. (OTC: SMVR) or Nutritional High International Inc. (OTC: SPLIF) (CSE: NHL), could reduce their raw materials costs (e.g. CBDs) by up to 80% and still achieve the same success for patients. At the same time, medical marijuana patients could benefit from improved product efficacy.
The bioavailability of cannabinoids has been an ongoing problem for the cannabis industry. According to researchers, smoking delivers cannabinoids at an average bioavailability rate of 30% at the cost of potential health issues, while edibles deliver bioavailability at just 5%. While patients desire edibles as a safer alternative to smoking, they may not be offering as much benefit to medical marijuana patients in terms of cannabinoid delivery.
Lexaria could license its technology to these companies to generate high-margin recurring revenue streams. With its existing access to bulk CBD oils, the company provides edibles manufacturers with an end-to-end solution cannabinoid solution, enabling them to focus on building products that taste good and consumers love. The technology also provides these companies with a competitive advantage of their own relative to the competition.
Additional End Markets
Lexaria isn’t limiting itself to the cannabis industry with regards to its breakthrough technology, judging by its recent patent application, which covers nicotine, non-steroidal anti-inflammatories (“NSAIDS”) and fat-soluble vitamins. These markets represent $722 billion, $22 billion, and $68 billion opportunities, respectively. In addition to the size of these end markets, there is a crucial public health benefit associated with these types of products.
Smoking cessation products created by companies like GlaxoSmithKline plc (NYSE: GSK) could incorporate the lipid-encapsulation technology in order to reduce the amount of nicotine required to manufacture its products, in much the same way that cannabis edibles manufacturers can reduce their CBD costs. Vaporizer manufacturers, like Vapor Group Inc. (OTC: VPOR), could also benefit by selling higher margin replacement cartridges.
NSAIDS and vitamins represent two other enormous target markets for its unique technology platform. Although NSAIDS are generally a safe and effective treatment method for pain, they have been associated with a number of gastrointestinal problems. Vitamins face a different problem in that they suffer from oxidative damage traveling through the body – a problem that can be avoided by incorporating it into a cell membrane with the company’s technology.
More than a Platform
The difference between Lexaria and other platform plays – such as early-stage biotech firms – is that the company already has products for sale on the market that incorporate its technology and no regulatory approvals are required to further commercialize the technology. At the same time, the patent production and licensing opportunities are potentially endless within its four areas of focus and potentially other applications in the future.
“We are thrilled to have generated these positive laboratory results substantiating the effectiveness of our technology,” said Lexaria Corp. CEO Chris Bunka. “We believe that this only increases the likelihood of our patents being granted in due course since it demonstrates how our technology improves absorption of CBD. We have every reason to believe it will function in a similar manner if tested with THC, nicotine, or any of the other molecules.”
The company recently introduced a number of new ViPova™ products, including Earl Grey Tea, Herbal Cherry Black Tea, and others, while expanding its retail sales and distribution network with its first one-the-ground sales and intelligence efforts beginning in June. With plans to introduce new flavors and products in August and September, the company’s new technology could be incorporated into a growing number of commercially available products.
Investors may want to keep an eye on Lexaria over the coming quarters as it continues to incorporate its innovative technology into new products and prove its technology on a clinical level. In terms of its own products, the technology could provide a durable competitive advantage relative to other products on the market, while licensing opportunities could open the door to new high-margin revenue streams over time.
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