May 24, 2022 -- InvestorsHub NewsWire -- via NetworkNewsWire
Editorial Coverage: Seems like yesterday people were smoking
cigarettes everywhere; many people still have memories of Grandpa
puffing on his Camels. It wasn’t until 1993 that smoking was banned
in hospitals and on airplanes in 1998. Despite these and many other
restrictions, the global market for nicotine-based products remains
incredibly robust. Total global retail sales associated with the
nicotine ecosystem during 2020 reached approximately $853
billion with around 5.2 trillion retail cigarette sticks
sold. Nicotine isn’t just big business, it’s huge business, and
companies are constantly looking for ways to keep and grow market
share.
The majors are evermore turning to innovation and alternative
delivery methods to achieve their objectives. An example of that is
the breakthrough technology of Lexaria Bioscience
Corp. (NASDAQ:
LEXX) (Profile) and its patented
DehydraTECH(TM) delivery platform. Suitable for use across a wide
range of product formats such as pharmaceuticals, nutraceuticals
and over-the-counter products, Lexaria’s DehydraTECH also increases
the delivery characteristics of orally administered nicotine.
Multiple companies have already licensed DehydraTECH technology
and are paying royalties to Lexaria for its use. Lexaria has
licensed DehydraTECH to the Altria Group (NYSE:
MO), the largest tobacco company in the country, which
is currently evaluating the tech for possible use in noncombusted
oral nicotine products. In addition, British American Tobacco Industries p.l.c.
ADR (NYSE:
BTI) has conducted some early evaluation of
Lexaria’s tech, and the market is waiting to hear if either company
might implement it. Meanwhile, Philip Morris
International (NYSE:
PM) is aggressively pursuing tobacco-free
nicotine products as GlaxoSmithKline
PLC (NYSE:
GSK) tries to wean folks from nicotine with
smoking cessation products. The trend is clear: smoking is out, and
new tech is in.
- Philip Morris is investing
$16 billion to acquire a leading smokeless oral nicotine
company.
- 1.1 billion people smoked cigarettes regularly worldwide in
2019, with ~71% wanting to quit.
- Lexaria Bioscience has developed and patented DehydraTECH, a
technology for enhancing delivery of oral nicotine.
- Lexaria is a technology provider to Altria for which Altria is
evaluating DehydraTECH for smokeless oral nicotine
formulations.
- Some countries are proposing national cigarette bans.
Click here to
view the custom infographic of the Lexaria Bioscience
Corp. editorial.
Looking for Tobacco Alternatives
When the world started enacting laws banning smoking, it didn’t
take long for the momentum to build, with countries worldwide
forbidding smoking in many public areas with a huge array of
punishments. In Bhutan, the sale or smuggling of cigarettes into
the small south-central Asian country is punishable by jail time
with no chance for bail. In a move to make smoking as unglamorous
as possible, Australia passed a law in 2012 restricting cigarette
packages to only a plain brown color with no labels or branding as
“light” or “mild.”
Still, the fact remains that an estimated 1.1 billion people
smoked cigarettes in 2019. According to stats from the World Health
Organization, a stunning 780
million people said they want to quit. As a result, people
look to a multitude of options, such as nicotine pouches, boosting
the market from $2.33 billion in 2020 with an eye-popping 30.7%
annual growth rate to $21.84 billion by the end of 2027, according
to MarketResearch.com.
This is an opportunity that lands right in the wheelhouse
of Lexaria
Bioscience Corp. (NASDAQ:
LEXX). The company has been developing its DehydraTECH
technology since 2014, regularly strengthening and broadening the
technology to an unprecedented degree. The company now stands as a
global leader in enhancing the speed and efficiency of orally
delivered lipophilic (fat-soluble) drugs and active pharmaceutical
ingredients (“APIs”). The company has protected its intellectual
property with a robust patent portfolio that currently consists of
25 patents granted in more than 40 countries, as well as another 50
patents pending worldwide.
The number of potential applications for DehydraTECH is mind
boggling. The technology has been proven to increase bioabsorption
of cannabinoids and nicotine by five to ten times. In some
instances, bioavailability for cannabinoids has increased up to 27
times relative to standard industry formulations. Bioavailability
is healthcare nomenclature for how much of the active ingredient in
a product reaches its target. Improving bioavailability can be the
difference between a blockbuster product and an also-ran. Among
other things, Lexaria is beginning the path of registering
DehydraTECH-CBD with the FDA for the purpose of treating
hypertension, an estimated $30
billion per year market in 2022.
Lexaria is also leveraging research demonstrating early-stage
effectiveness in improving delivery through human skin for the
potential development of topically administered products, including
patches, creams and lotions.
Major’s Attention
With demand swelling for nicotine alternatives, Lexaria is
understandably aggressively proving the superiority of utilizing
DehydraTECH in product manufacturing. That means research and
studies — and the tech hasn’t disappointed. An oral
nicotine absorption study completed late in 2021 revealed
that Lexaria’s nicotine delivered via an oral pouch product
required between two to four minutes to deliver nicotine levels in
blood plasma compared to concentration-matched controls that took
45 minutes. Peak levels of DehydraTECH nicotine, which were similar
at both 8 and 30 minutes, were approximately 10 times higher than
the peak level of the controls (at ~45 minutes). In short, the
pharmacokinetic (“PK”) data, or data mapping the complete process
of drug delivery through exiting the body showed DehydraTECH to be
markedly superior throughout the two-hour duration of effect.
Dosing is slated to begin this summer for Lexaria’s latest human
study, a PK randomized, double-blinded, cross-over study comparing
Lexaria’s DehydraTECH-nicotine pouch performance to that of
existing leading brands currently sold in the United States, such
as ON! and Zyn. The nicotine pouch market is on fire, and if
Lexaria’s DehydraTECH performs as expected, the stock could catch
fire too.
This study is particularly important because ON! is a product
manufactured by Helix Innovations LLC, an Altria joint venture, and
Zyn is a product of Swedish Match, which is subject to a
takeover bid. It is a safe assumption that major competitors
will be looking at the outcome of this type of a trial as a means
to differentiate their products with faster onset, higher-peak
level and longer duration of nicotine delivery than anything else
on the market. To that point, it is worth noting that in April
Lexaria entered into new
agreements with Altria Client Services LLC, noting that they
will be compensated to provide certain DehydraTECH power-based
nicotine formulations to be evaluated by Altria over the next 12
months.
M&A Activity Bodes Well for Lexaria
As mentioned, Swedish Match is the owner of the popular Zyn
brand of tobacco-free nicotine pouches. Shares of the
Stockholm-based company rocketed ahead about 25% earlier this month
to an all-time high after Philip Morris, the international maker of
Marlboro cigarettes, disclosed being in negotiations to buy Swedish
Match, a move to increase its exposure in the fast-growing market
for alternatives to cigarettes. It was later reported that Philip
Morris was bidding $16 billion to buy Swedish Match, a monumental
development.
Media outlets ran wild with the takeover news, making references
to a battle underway between Philip Morris and Altria, two of the
world’s biggest names in tobacco. Ironically, Philip Morris was
actually a spin-off of Altria in 2008: each of them
continuing to sell the Marlboro brand but with Altria limited to
the US market, and Philip Morris basically to the rest of the
world.
Altria’s stock dropped more than 10% from its all-time high on
the news, as analysts and investors alike interpreted a Swedish
Match buyout as positive for Philip Morris to capture market share
immediately in the U.S. next-generation-products market. This makes
the relationship between Altria and NASDAQ-listed Lexaria, a
company with a $12 million market cap, all the more interesting for
new product creation.
Benefiting from Smoking Bans
Every country isn’t going to follow Bhutan and lock people up
without bail for lighting up, but there certainly will never be a
“going back” to the way things were. Moreover, outright bans are
becoming more popular than one might realize.
On April 28, 2022, the FDA made it clear that it plans
to outlaw
sales of menthol-flavored cigarettes in the U.S., which
means that the 18.5 million Americans that smoke menthols are going
to have to find something different to curb their nicotine craving.
It was the latest move by countries to “help” people kick the
habit. In December, New Zealand passed legislation that will make
it illegal for people born after 2008 to buy cigarettes ever.
Similar laws are being imposed in the States by local
jurisdictions. For instance, Brookline, Massachusetts, last year
made it illegal for anyone born after January 1, 2000, to purchase
tobacco and vape products. For companies such as Lexaria, these
bans are beneficial because DehydraTECH only works on
noncombustible forms of nicotine.
Reading the Smoke Signals
For cigarette manufacturers, the smoke signals are spelling out
the smothering of the combustible cigarette market. Granted, it
will not be an overnight extinguishing, but most companies’
valuations are tethered to future sales, which means companies have
to remain nimble now to cement their future.
Altria Group (NYSE:
MO) has publicly stated its mission, which is to
responsibly lead the transition of adult smokers to a smoke-free
future. The
company offers a portfolio of smoke-free platforms,
including e-vapor, heated tobacco products, smokeless tobacco and
its popular On! nicotine pouches. On! is a premium portfolio of
product offerings across a variety of flavors and nicotine
strengths widely distributed in more than 100,000 stores that cover
80% of total U.S. oral tobacco volume.
British American Tobacco Industries p.l.c.
ADR (NYSE:
BTI) is growing a range of reduced-risk products
that includes vapor, tobacco heating products, and modern and
traditional oral products, which include oral tobacco and nicotine
products. Last July, new
research provided the first real-world evidence that
people switching from cigarettes to exclusive use of glo, BAT’s
flagship Tobacco Heating Product, can significantly reduce their
exposure to certain toxicants and indicators of potential harm
related to several smoking-related diseases compared with
continuing to smoke.
Philip Morris
International (NYSE:
PM) is exploring catapulting itself into the U.S.
market for next-generation products through the acquisition of
Swedish Match, the company that controls nearly one-half of the
world’s tobacco-free nicotine market. If PM goes through with the deal, it automatically
bolsters its footprint in the U.S. where it currently generates
about 5.5 percent of its total revenue.
GlaxoSmithKline
PLC (NYSE:
GSK) is active in
the nicotine replacement therapy (“NRT”) market. The
company sells well-known brands such as Nicoderm CQ and Nicorette
lozenges and gums and provides educational information so people
better understand how NRT works. In the United Kingdom, Canada,
Nordics and France, Glaxo offers its Nicotell mint nicotine
lozenge.
Grandpa’s Camels are fading as a world without conventional
cigarettes emerges. A cigarette-less world may not be here
tomorrow, but it is not infinitely out on the horizon either. Those
looking to capitalize on the future are exploring opportunities
ahead of the trend.
For more information about Lexaria Bioscience
Corp., please visit Lexaria
Bioscience Corp.
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