VIDEO: Lexaria Drug Delivery Patent Has Big Revenue Stream Potential
Lexaria Bioscience Corp. (CNSX:LXX) (OTCMKTS:LXRP) is a drug delivery platform innovator. CEO Chris Bunka talks about their new patent which covers a new cannabinoids and other ingestible molecules delivery platform, as well as their DehydraTECH™ technology, which improves tastes and the rapidity in which a drug reaches your blood stream. Their products aren’t limited to only cannabinoids, as they feel one of the biggest potential uses in the market is the nicotine space.
James West: Chris, thanks for joining me today.
Chris Bunka: Thanks, good to be here.
James West: Let’s talk about Lexaria: what’s new, what’s happening?
Chris Bunka: Oh my God! Well, we just were awarded a new patent by the US patent office on December 12th, and that has been a really transformative event for us. It’s added a lot of value.
James West: Okay, what is the patent on?
Chris Bunka: Patent covers our drug delivery platform. We had filed it applying for the ability to deliver cannabinoids, non-psychoactives and psychoactives. Well, we received that patent; we were really happy. But, to our surprise, the US patent office also granted us future patent applications that were in queue, and so our drug delivery technology is now patented for the delivery of cannabinoids, but also fat-soluble vitamins, also for NSAIDS, non-steroidal anti-inflammatories. So, that stuff you have in your bathroom like Ibuprofen or Aspirin, and also, the big one: nicotine.
So we actually have the IP in-house now, to deliver any of those molecules through the mouth: pill, beverage or food.
James West: Wow, that’s impressive. And so what is the biggest revenue generator within that portfolio of options?
Chris Bunka: The biggest one, eventually, is going to be nicotine. It’s a $700 billion annual industry around the world. It’s one of the biggest industries there are, which is about –
James West: This is to quit smoking.
Chris Bunka: To quit smoking or to get your nicotine fix without harming your lungs. So imagine the idea that if you’re sitting in your office on Bay Street, and you see people running down to the street level to have their smoke break, instead of that, they could have nicotine in a cup of coffee. Much safer, much more healthy, and more cost-effective.
James West: Interesting. Nicotine is just addictive, though, isn’t it?
Chris Bunka: Well, it is, but small amounts of nicotine are actually being found to be beneficial in Alzheimer’s treatment, for example.
James West: Gonna start smoking when I’m 80!
Chris Bunka: Nicotine by itself, in small quantities, is not dangerous. It is the delivery modality that causes all of the distress.
James West: Is that right? Okay, so now you’ve mitigated that problem. So tell me: what is the essential difference between your delivery system versus traditional ones?
Chris Bunka: Oh, well, it’s brand new. I mean, it’s just on patent. You’ve heard of things like nanotech, lipispheres, liposomal delivery…great technologies, and they really do have a place. They’re a little old; most of those are 10-20, in some cases even 25 years old, and they’re coming off of patent, which means they’re becoming generic. Ours is sort of representing the next wave of delivery modality, and the nanotechs and the other technologies that we compete against can’t offer all of the benefits that we do, which is, we improve the taste of things, we improve the rapidity with which they reach your bloodstream because we avoid first pass liver metabolism. And we get a lot more of it across the intestinal wall. In lab tests, we’ve had numbers as high as 500 percent more, crossing the intestine.
James West: So what’s going on at the molecular level?
Chris Bunka: Well, we use oleic acid, which is a component of a long chain fatty acid. So oleic acid is something that you find in sunflower oil, for example. And oleic acids are one of the only things a human can ingest that will not normally be shunted into the liver; instead, as it crosses the intestinal wall at a molecular level, it is shunted into the lymphatic lacteals and drops into the lymphatic circulatory system.
If you think about upstream/downstream, it’s a way of saying, when we have an API, an active pharmaceutical ingredient, we’re able to put it into the bloodstream downstream of the liver instead of in front of it, where it has to have that metabolite.
James West: Okay, interesting. So what’s the status of your sort of financial condition in reference to this new patents and everything? Are there people uptaking this? Are you licensing it, what’s going on?
Chris Bunka: Yeah, it’s just starting. It’s been pretty incredible. So we received our very first patent just over a year ago for non-psychoactive cannabinoids; we’ve signed up our first Colorado cannabis company that is using our technology now in Colorado. We’re in negotiations and discussions with over 20 companies around Mexico, United States and Canada right now to adopt our technology. Different applications for different people. And in fact, later this month, late in January, we’re going to be starting our first lab work with lab rats on nicotine absorption.
So what we’re trying to do is open up new markets for some of these other vertical sectors, and not only be concentrated on cannabis, although cannabis is the immediate win for us.
James West: Sure. So is 2018 the year of profitability for Lexaria?
Chris Bunka: Maybe. I think by the end of the year, we should be operating at a cash flow positive basis; that is our internal expectation. And you have to realize, our business model is a little different: we don’t sell a product, we sell knowledge. So if you owned a licensed producer, we would come in, we would train you and your staff on how to use our process to greater profit for your products that are being sold, and greater effectiveness for your customer, and we take a royalty stream. So we’re more like one of those mining companies that mines royalty streams rather than rock; that’s really more representative of Lexaria.
James West: Elaborate on your revenue stream, how does that work?
Chris Bunka: Absolutely. So, we typically grant a license to our technology to, say, a licensed producer. And what we do, it’s all for ingestibles and oral delivery, so we have separated edible foods and pills into six sub-categories. Beverages, for example, are different than, say, pills and capsules.
We generate usually five licenses in each of those six categories, per geographic territory. So for example, Canada: five times six, one territory, that’s 30 revenue streams in Canada.
In a place like the United States, though, where there’s 50 different states and each has the ability to have their own regulatory jurisdiction, that’s 50 x 30, or 1500 revenue streams, coming out of the United States, to use our technology – in theory.
James West: Wow, so it snowballs.
Chris Bunka: Snowballs very quickly, and our technology is license-able around the world. We have patents pending in 42 countries right now.
James West: Wow, that’s great. Well, let’s leave it there for now, Chris. We’ll come back to you in a quarter’s time. Sounds like you’re making great progress. Thanks for joining me today.
Chris Bunka: Thanks so much, James.
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