Is it time to give up on Lexaria Bioscience (CSE: LXX)?
QUESTION: “My question relates to Lexaria Bioscience (CSE: LXX) (OTCQX: LXRP). Why is it so hard to find information on any new licensees? If LXRP has cash flow they should show it. They need to provide such information to boost the investor confidence. Also, I suspect the cancellation of the stock options granted through management employment contracts was because of poor performance. I am close to giving up on them.”
N. C. from San Antonio, TX
ANSWER: In fairness, N.C.’s question was received before the recent press releases issued by LXRP. Also, I selected the question because answering it offers a learning opportunity.
First, I can sense the frustration and emotion in your words and that is after I toned it down a bit. A shrewd investor once said words to the effect that we should buy stocks as if we are buying refrigerators and not as if we are buying perfume. In other words, investing should be done with as little emotion as possible.
Also, we live in a world that demands instant gratification but this does not always work well in investing. As renowned investor and investment guru Warren Buffett says frequently, “My favorite hold period is forever.” In other words, Buffett advises patience.
To start with, N.C. is asking or news on more licensees. That’s fair enough. But let’s not lose sight of the fact that our little company Lexaria has entered into an agreement with Altria (NYSE: MO), the world’s largest tobacco company. If I had to choose, I would take a chance on the Altria transaction and give away any smaller licensing agreements that might pop up because if the Altria agreement is completed our investment in LXRP will be a significant winner in my opinion.
And before we get carried away criticizing LXRP management, let’s not forget they were able to strike a deal under which Altria gets exclusive rights to the DeHydraTECH™ technology for oral nicotine applications in the United States. LXRP retains the rights for use with vitamins and nonsteroidal anti-inflammatory drugs (NSAIDs) that both have larger market potential than cannabis which it also retains. Finally, there may even be some leftover nicotine applications as well.
Having said all of that, let’s take a look at the recent announcements from LXRP.
Lexaria announced it entered a definitive 5-year agreement, via its subsidiary Lexaria CanPharm ULC, to provide its patented DehydraTECHTM technology to a private California-based cannabis company to use in certain cannabis-based beverages to be produced and sold in the states of California and Nevada. Financial terms of the agreement are not being disclosed. The DehydraTECH™-enabled beverages are protected under Lexaria's many existing US-granted patents and may include any combination of ready-to-drink beverages such as non-alcoholic beers, wines and spirits; cold or hot coffee or teas, sports drinks and much more. Lexaria has developed methods of combining nano-emulsion technology with its proprietary DehydraTECH™ processes to create beverages with market-leading aesthetic and performance characteristics. Lexaria is currently experiencing unprecedented demand in several North American markets for use of its technology for beverage applications.
Recently Lexaria reported additions to their Scientific Advisory Board. The additions are: Dr. Dwayne Godwin, Dr. Terry D. Blumenthal, Dr. Matthew Fraser and Dr. Carla Lema Tome. Each person has a strong set of credentials that can be found (here). The fact that people of such standing in their respective scientific communities reflects very well on the DehydraTECH™ technology, John Docherty, Chris Bunka and the Company. It also reflects well on our investment in Lexaria.