Lexaria Bioscience Corp: What’s Driving LXRP Stock Higher?

lexaria biosciences stock

Why LXRP Stock Is Surging

Earlier in the year, regulators at the U.S. Food and Drug Administration (FDA) opened the door to a new age of cannabidiol treatment—in which companies like Lexaria Bioscience Corp (OTCMKTS:LXRP, CNSX:LXX) strip down medical marijuana to purer forms of treatment.

What does this mean for our LXRP stock forecast?

The Obvious: Each patent granted to Lexaria pushes LXRP stock higher. In the last six months, it rose more than 140% on the strength of eight new patents. And on any given day, it’s not uncommon to see the share price rise by five percent or more.

The Not-So-Obvious: We all know about the opioid epidemic. It is destroying millions of Americans across the country, which is why state governments are desperate to find alternatives to these addictive painkillers. If cannabidiol products are part of the solution, sales could shoot through the roof, thereby leading to even more gains in LXRP stock.

Chart courtesy of StockCharts.com

At the heart of these trends is Lexaria’s “DehydraTECH” technology.

Not only does it promote better drug delivery and dosage, but it has support from the National Research Council and 20 years of licensing rights from the U.S. Patent and Trademark Office (USPTO).

Lexaria uses this patented technology to make, believe it or not, edible cannabis and nicotine products. The whole point of DehydraTECH technology is to make these products healthier, better-tasting, and more effective in whatever they’re trying to do.

For a nicotine product, that could mean faster routes into the bloodstream, whereas a pain medication might isolate cannabidiol properties within marijuana and distill them into a drink. It all depends on the specific drug.

What Lexaria has discovered, however, is that merging taste and medicine is a complex process. Anyone who’s winced after tasting cough syrup knows that Lexaria has a point. But through extensive research, the company seems to have pioneered a breakthrough blend of flavorful snacks with strong medicinal properties.

None of this would have mattered 15 years ago. Lexaria would have been a minor penny stock in perpetuity, with no hope of widespread adoption. But times have changed.

Marijuana legalization is ricocheting from state to state, country to country, creating stock market opportunities unlike anything we’ve seen in the last few years. That’s why LXRP stock is soaring.

Lexaria News & Updates

When LXRP stock began to soar in October 2017, it was based somewhat on the strength of pending patents.

Normally, that kind of growth would wear thin and sputter to a halt after a few months, but Lexaria managed to keep the tailwinds coming strong.

Here are some of the positive pieces of news that kept its share price flying high.

March 22: USPTO allowance for ingredients that improve the taste and digestibility of cannabidiol products. (Source: “Lexaria Bioscience Corp. Receives New U.S. Patent Allowance for ‘Composition of Matter’ Cannabinoid Delivery,” Lexaria Bioscience Corp, March 22, 2018.)

April 11: Another USPTO allowance to protect its recipe for cannabinoids. (Source: “Lexaria Bioscience Corp. Receives New U.S. Patent Allowance for Cannabinoid Delivery and Updates its Expanding Patent Portfolio,” Lexaria Bioscience Corp, April 11, 2018.)

April 17: A breakthrough in edible nicotine products. The drug pushes 148% more nicotine to the bloodstream 1,160% faster. (Source: “Lexaria Achieves Significant Breakthrough in Alternative Nicotine Delivery Technology,” Lexaria Bioscience Corp, April 17, 2018.)

April 25: A partnership to distribute “cannabis beverages” in California, one which actually shows up on the top-line results and consequently in the share price. (Source: “Lexaria Enters Definitive License Agreement with California Cannabis Beverage Manufacturer,” Lexaria Bioscience Corp, April 25, 2018.)

April 27: A second deal to make cannabis beverages, this time weed-infused, non-alcoholic beers and wines to be distributed in Canada. (Source: “Lexaria Announces LOI with Hill Street Beverage Co. for Cannabis Infused Alcohol-Free Beer and Wine,” Lexaria Bioscience Corp, April 27, 2018.)

April 30: A deal to manufacture cannabis-infused chocolates for 150 weed dispensaries in Colorado. (Sources: “Lexaria Technology Brings “Fast-Acting” to Nuka’s 1906 Cannabis Products with 10-Year Deal Consummating Proof-Of-Concept Relationship,” Lexaria Bioscience Corp, April 30, 2018.)

And finally, the big one:

May 23: Four new patents will be granted in the U.S.; and another four patents are scheduled to arrive in Australia. (Source: “Lexaria Bioscience Corp. Receives New Granted Patents,” Lexaria Bioscience Corp, May 23, 2018.)

Adding eight new patents is not just “good news” for LXRP stock. It’s a direct increase in intellectual property, a boost to the asset side of the balance sheet, and a massive tailwind for the Lexaria Bioscience Corp stock price.

Some Concerns About LXRP Stock

I’m a little concerned about Lexaria’s float, which is less than two-thirds the number of outstanding shares. Under normal circumstances, this could mean that early-stage investors are contractually bound to hold their shares for a period of time before selling.

Or it could mean that a certain number of shares were allocated to one of the firm’s managers. This would also have tight rules on how much stock you can sell, and when.

In Lexaria’s case, the latter is to blame.

The company’s CEO, Christopher Bunka, owns more than 14.1 million shares, according to recent filings. Almost 7.3 million shares are in his name and another 5.6 million are through a company named C.A.B. Financial Services Ltd. (Source: “Management information circular – English,” System for Electronic Document Analysis and Retrieval, May 15, 2018.)

That’s almost 20% of the company!

Bunka also has 247,000 options with an exercise price at $0.09 and another 550,000 at $0.10. You think that would be enough, but he also has 450,000 warrants at $0.14.

Analyst Take

Overall, I think Lexaria presents an interesting opportunity in the marijuana space. It’s a relatively unknown stock trading in a niche corner of the market. You don’t come across those every day, given the amount of scrutiny in this sector.

Our Lexaria stock forecast is extremely bullish, with a price range of $3.00 to $5.00.