NetworkNewsWire
Editorial Coverage: In a country where the life-threatening
risks of smoking are well-known and 22 million smokers want to
quit, a milestone agreement between a drug delivery platform
innovator and one of the world's largest producers and marketers of
tobacco and cigarettes may offer tobacco users an alternative
method of satisfying their needs along with greatly reduced
risk.
- The quest for other alternatives to cigarettes has brought Big
Tobacco to the door of biotech company Lexaria.
- The bioscience potential for nicotine delivery cannot be
ignored and may deliver myriad benefits.
- Lexaria’s proprietary DehydraTECH technology makes the company
an ideal partner.
Lexaria Bioscience Corp. (CSE: LXX) (OTCQX: LXRP)
(LXRP
Profile) has announced that its wholly owned
subsidiary Lexaria Nicotine LLC and Altria Group Inc.
(NYSE: MO) have executed a
definitive agreement to pursue innovation in oral, reduced-risk
nicotine consumer products using Lexaria’s patented DehydraTECH™
technology. Other tobacco companies are also exploring alternative
options for smokers. British American Tobacco Industries
(NYSE: BTI) (OTC: BTAFF) is exploring vaping and using the
move away from cigarettes to bolster its public image.
Philip Morris International Inc. (NYSE: PM) has
been campaigning to get international support for alternatives to
cigarettes as well as developing its own alternatives, including
heating tobacco. And Imperial Brands PLC ADR (OTCQX: IMBBF)
(OTCQX: IMBBY) has established a stake in a cannabis
biotech company as it explores the options for this alternative
drug.
To view an infographic of this editorial, click here.
Tobacco’s Big Challenge
Big Tobacco currently faces an uncertain future. Decades of
anti-smoking campaigns have had their desired effect in improving
the health of consumers, with smoking levels dropping and the habit
increasingly being excluded from public spaces. Vaping has
accelerated this change, providing smokers with a less damaging,
more socially acceptable alternative. That’s bad news for the
tobacco companies, whose traditional consumer base is fading
fast.
With these trends clearly unlikely to change, tobacco companies
are exploring different avenues to stay viable. Altria recently
invested $12.8 billion in the country’s leading
vape manufacturer, JUUL Labs Inc. Rather than fighting against the
trend and, in the process, possibly endangering lives, savvy
companies are investigating alternatives to keep their businesses
alive. One of the best options may be an alliance with
bioscience.
Holding Out Promise
The quest for other alternatives to cigarettes has brought Big
Tobacco to the door of biotech company Lexaria
Bioscience Corp. (CSE: LXX) (OTCQX: LXRP), and
specifically Lexaria’s DehydraTECH technology, which enhances the
performance of beneficial compounds in ingestible products across
four categories: taste, smell, speed of action, and bio-absorption
and bioavailability. This move holds out promise to both help
nicotine-addicted smokers move away from unhealthy combusted
tobacco and help Altria identify a new revenue source.
The agreement outlines a milestone-based research and
development program executed by Lexaria. The program will include a
comprehensive series of clinical investigations of oral forms of
nicotine delivery, utilizing the company’s patented DehydraTECH
technology. Altria is funding the program with an initial
investment of $1 million and an option for additional funding of up
to $12 million through several phases of private financing. In
exchange for the funding, Altria will receive a minority equity
interest in Lexaria Nicotine and specific DehydraTECH license
rights.
“Lexaria Bioscience is proud that, after careful selection,
Altria has chosen to fund research into DehydraTECH technology and
potentially commercialize this technology for oral nicotine,” says
Lexaria Bioscience CEO Chris Bunka. “This partnership will provide
significant benefits to Lexaria Bioscience and its shareholders
with a world-class R&D program and regulatory compliance
process. We believe Altria is the best corporate partner we could
work with to truly make a difference in the lives of millions of
consumers.”
More than Big Money for Big Innovations
The bioscience potential for nicotine delivery cannot be
ignored, but this strategic partnership is about more than big
money for big innovations. Rather, the creation of alternative
delivery systems for nicotine is rooted in helping people kick the
smoking habit and removing the risk of lung cancer and the impact
of passive smoking on those around them. The aim of the agreement
is to create a more socially acceptable and less disruptive way to
consume nicotine.
Through the agreement, Altria has been granted an exclusive
license to use DehydraTECH technology for oral nicotine delivery
forms in the United States and a nonexclusive basis to use the
technology in international markets. Important for stakeholders of
Lexaria, the company will receive a royalty from Altria based on
revenue generated from the sale of nicotine products containing
DehydraTECH.
The agreement between Lexaria and Altria has the potential to be
a longer-term relationship. Lexaria Bioscience will at first retain
a majority interest in Lexaria Nicotine. But Altria has the option
to acquire 100 percent ownership interest in Lexaria Nicotine
commensurate with then-current fair market value. And Lexaria
Bioscience has not sold any of its own equity to Altria, remaining
fully independent. With favorable research results, such an outcome
could set up Altria with a new way forward in tobacco products
while providing Lexaria Bioscience with significant additional
financial resources to fund growth in its hemp/CBD, pharmaceutical
and other divisions.
Why Lexaria
Lexaria is hardly a big player in the world of bioscience, so
why has Altria, a major player in its market, chosen the company as
a partner?
The answer lies in Lexaria’s proprietary
DehydraTECH technology. This technology has already
demonstrated its ability to mask unpleasant flavors and speed up
delivery of orally ingested nicotine in successful previous animal
studies. Imagine the possibility of satisfying a nicotine craving
in something as simple and unobtrusive as a cup of coffee.
In addition to making bioactives more pleasant to consume,
DehydraTECH makes them more effective once they are in the body.
The human digestive system doesn’t absorb all of these bioactives
when they are consumed. Smoking tobacco gives the user a faster,
stronger “hit” because of the higher absorption rate through the
lungs. DehydraTECH increases and speeds up the body’s absorption of
bioactives such as nicotine in edible format, allowing a healthier
way to increase absorption than smoking. This approach means
nicotine products using DehydraTECH no longer need to be combusted
or aerosoled and completely avoid lung absorption.
“Lexaria Bioscience has repeatedly demonstrated the powerful
effects of its patented DehydraTECH technology for enhancing the
palatability and speed of onset of orally consumed bioactive
substances such as nicotine,” said John Docherty, president of
Lexaria Bioscience. “Laboratory research to date on oral nicotine
formulations has been quite encouraging. We are very excited to
advance the clinical phases of our comprehensive R&D program
together with Altria with a view to full commercial product
development.”
New Directions for an Old Industry
Altria isn’t the only company in the industry adjusting to a
world where tobacco is socially stigmatized. British
American Tobacco Industries (NYSE: BTI) (OTC: BTAFF) has
had more success in the vaping game. The company recently announced a new range of e-cigarette products, under
the Vype brand. By refining the evaporating technology in its
devices, the company has created what it believes will be a more
satisfying consumer experience. This comes as part of a broader
strategy in which the company is looking to offer consumers
lower-risk tobacco products, improving the health of its customer
base and the company’s public reputation. BTI recently released a report on its work in this area,
highlighting the lengths it has gone to in offering alternatives to
conventional cigarettes.
Philip Morris International (NYSE: PM), a
company spun off Altria to avoid the historic problems of the U.S.
tobacco market, has made much of its agenda to provide alternatives
to smoking. It has been working to convince medical
authorities and world leaders of the benefits of other tobacco
options — alternatives the company is developing. One of its
creations is the IQOS heated tobacco system, which aims to provide
the absorption benefits of inhalation while reducing the harm of
smoking.
Imperial Brands (OTCQX: IMBBF) (OTCQX: IMBBY),
another Big Tobacco company with a significant range of vaping
products, is combining its vaping interests with investment in
cannabis. It recently took an equity stake
in Oxford Cannabinoid Technologies, a biopharmaceutical company
focused on researching, developing and licensing cannabinoid-based
compounds and therapies. This puts Imperial Brands in a position to
approach alternatives to cigarettes from multiple directions.
As smoking declines, these investments in pharmaceutical science
could be vital for the survival of tobacco companies and could
generate new revenue streams for innovative biotech players.
For more information on Lexaria, please visit Lexaria
Bioscience Corp. (CSE: LXX) (OTCQX: LXRP)
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