- LXRP’s subsidiary, Lexaria Nicotine LLC, enters definitive investment agreement with Altria Ventures Inc.; Altria to fund R&D, receive license rights and equity
- Altria will fund research on LXRP’s DehydraTECH oral nicotine products, pay sales royalties and may fund up to $12 million more through a series of private financings
- LXRP has not sold or optioned its own equity and still retains majority equity ownership of Lexaria Nicotine, LLC; Altria would receive minority equity interest in the subsidiary
Lexaria Bioscience Corp.’s (CSE: LXX) (OTCQX: LXRP) wholly owned subsidiary, Lexaria Nicotine LLC, has entered a definitive investment agreement with Altria Group Inc.’s (NYSE: MO) Altria Ventures Inc. subsidiary for a partnership. Altria will initially fund $1 million toward LXRP’s R&D on nicotine consumer products using DehydraTECH (http://cnw.fm/dMkZ6).
Altria will also have the option to provide up to $12 million in additional research monies to underwrite LXRP’s R&D through multiple phased private financings. In exchange, Altria’s indirect wholly owned subsidiary will receive certain license rights to oral, reduced risk nicotine consumer products that use DehydraTECH technology. The license for Altria to commercialize these products will be exclusive in the U.S. and non-exclusive elsewhere globally. Altria will pay an ongoing royalty on all products sold that use Lexaria’s technology.
Based in British Columbia, Canada, LXRP is a biotechnology company and drug delivery platform innovator that out-licenses its disruptive delivery technology that promotes healthier ingestion methods. LXRP holds a patent for oral delivery of all cannabinoids and has a growing IP portfolio which includes 10 patents granted in the U.S. and Australia. DehydraTECH is its proprietary absorption technology platform.
Lexaria Nicotine plans to conduct a series of clinical investigations into oral forms of nicotine delivery using DehydraTECH technology.
In a news release, Chris Bunka, CEO of LXRP, said, “This partnership will provide significant benefits to Lexaria Bioscience and its shareholders with a world-class R&D program and regulatory compliance process.”
Per the terms of the agreement, Altria will have the option to buy 100 percent ownership of LXRP’s subsidiary at then-current fair market value, but no equity in LXRP itself. Altria will also have the right to appoint one of the seven directors of LXRP. As the phased additional investments are made, Altria will then have the right to appoint up to three directors.
Altria’s wholly owned subsidiaries include Philip Morris USA Inc., and it holds an equity investment in Anheuser-Busch InBev SA/NV.
For more information, visit the company’s website at www.LexariaBioscience.com
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