Ryan Allway August 9th, 2018 Uncategorized The tobacco/nicotine industry stands at an interesting point in history. While the negative side-effects of smoking have... Lexaria’s DehydraTECH™ Could Transform the $680 Billion Tobacco Industry

Ryan Allway

August 9th, 2018

Uncategorized


The tobacco/nicotine industry stands at an interesting point in history. While the negative side-effects of smoking have reduced cigarette volumes, many existing smokers don’t have a viable alternative that delivers nicotine quickly enough into the bloodstream. Rising cigarette prices are quickly pushing these consumers, which spend upwards of $680 billion per year, toward alternatives, like e-cigarettes or potentially new edible nicotine products. Demand for alternatives is skyrocketing: private e-cig company JUUL has current monthly revenue of US$200 million and has been growing at more than 600% per annum for three years.

Lexaria Bioscience Corp. (CSE: LXX) (OTCQX: LXRP) is focused on non-combustible opportunities using its DehydraTECH™ delivery platform. In recent in-vivo animal studies, the company demonstrated that its delivery technology achieved nearly double the delivery than non tech-enhanced edible forms of nicotine, as well as significantly improve nicotine absorption across all subsequent time points — making it a compelling nicotine replacement option.

For consumers craving nicotine, speed matters, and DehydraTECHTM delivered 317% more nicotine within 30  minutes than the non tech-enhanced control.

CFN Media recently sat down with Lexaria CEO Chris Bunka at the NCIA 2018 to discuss the company’s unique approach to the market and what’s coming up.

Quantifying the Nicotine Market

Tobacco companies sold about 5.5 trillion cigarettes in recent years, according to the British American Tobacco, along with over billions of cigars and millions pounds of smokeless tobacco products. The majority of these cigarette sales came from just a handful of multinational companies: Altria Group Inc. (NYSE: MO), British American Tobacco Inc. (NYSE: BTI), and Imperial Brands Inc. (OTCQX: IMBBY).

Tobacco revenue from these sources reached around $680 billion in recent years, excluding China’s market, driven by higher prices and emerging market demand offsetting lower consumption in developed markets.

If you expand the market to nicotine products, and not just tobacco, that figure is expanding even more rapidly. E-cigarettes have become the fastest growing segment of the market, increasing from about seven million in 2011 to about 35 million in 2016. The World Health Organization expects this figure to grow to nearly 55 million by 2021, which has piqued the interest of many of the major tobacco companies.

Tobacco Kills, Not Nicotine

There’s no doubt that smoking tobacco is harmful, despite the industry’s dubious attempts to silence these facts decades ago. According to Cancer.gov, tobacco smoke contains more than 7,000 chemicals, including at least 250 that are known to be harmful and nearly 70 that have been definitively tied to cancer. Smoking harms nearly every bodily organ and leads to about 480,000 premature deaths each year in the U.S. alone.

In terms of dollar costs, smoking-related illnesses cost the United States healthcare system more than $300 billion each year, according to the CDC, including $170 billion in direct medical care and $156 billion in lost productivity due to smoking side-effects. For example, the risk of developing lung cancer or chronic obstructive pulmonary disease (COPD) can dramatically reduce one’s ability to function on the job.

Nicotine is what makes cigarettes so addictive for three reasons:

  1. Tolerance – More and more nicotine is required to produce the same effect in the smoker at the initial stage.
  2. Reinforcement – Nicotine is sufficiently rewarding to spur self-administration.
  3. Withdrawal – Abrupt cessation can lead to powerful craving and a recognizable withdrawal syndrome that can encourage relapse.

Despite its addictive properties, nicotine itself is a mild stimulant that poses negligible risks in healthy people. It even enhances the performance of some tasks, including those requiring vigilance and visual cue processing, and can have memory and concentration benefits in the short-term. This means that nicotine patches, nicotine-infused vape oils, and other nicotine products don’t pose a significant hazard to healthy adults.

Lexaria’s DehydraTECH™ Play

Lexaria Bioscience Corp.’s (CSE: LXX) (OTCQX: LXRP) DehydraTECH™ technology was originally designed to improve the bioavailability of cannabinoids to help physicians, patients, and recreational users experience faster effects with a better taste. The technology works by encapsulating active ingredients in a lipid membrane to avoid metabolism in the liver and effectively reach the bloodstream.

Earlier this month, the company announced that the same technology holds promise in nicotine delivery. An in-vivo animal study delivered nicotine in an edible form into blood plasma in just minutes after dosing with 90.2 percent greater delivery than the concentration-matched control formulation by the 10-minute mark. That’s a big development for the smoking cessation market — much less the wider tobacco industry.

“Lexaria’s DehydraTECH™ breakthrough technology is demonstrating significant effectiveness in delivering nicotine into the bloodstream much more rapidly than we thought possible, and at levels approaching two times more effective than controls,” said Chris Bunka, Chief Executive Officer of Lexaria Bioscience Corp. “If we can develop viable ingestible alternatives to cigarette smoking we could help hundreds of millions of people avoid many of the disease states associated with smoking and I cannot imagine a more rewarding destiny bestowed upon Lexaria Bioscience Corp.”

The study significantly widens the potential use cases for DehydraTECH™ beyond cannabinoids and into nicotine. In addition, the company has been actively studying the potential for the delivery platform in non-steroid anti-inflammatories (NSAIDS), such as Tylenol®, which represents another multi-billion dollar market.

Looking Ahead

Lexaria Bioscience Corp. (CSE: LXX) (OTCQX: LXRP) represents a compelling investment opportunity within the cannabis industry and wider tobacco and pharmaceutical industries. With a patent portfolio that’s second to none, the company is quickly protecting its DehydraTECH™ platform across a wide array of multi-billion dollar markets that could add up to a trillion dollar opportunity for investors over the long-term.

For more information, visit the company’s website or download their investor presentation.

Ryan Allway

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.


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