PART I—FINANCIAL INFORMATION [Item 1. Financial Statements](index=2&type=section&id=Item%201.%20Financial%20Statements) This section presents Lexaria Bioscience Corp.'s unaudited interim consolidated financial statements for the period ended May 31, 2025, covering balance sheets, operations, equity, cash flows, and detailed notes on business and accounting policies [Consolidated Balance Sheets](index=2&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) Consolidated Balance Sheet Highlights (May 31, 2025 vs. August 31, 2024) | Metric | May 31, 2025 | August 31, 2024 | | :-------------------------------- | :----------- | :-------------- | | Total Current Assets | $5,806,778 | $7,897,986 | | Total Non-current Assets | $934,588 | $969,803 | | TOTAL ASSETS | $6,741,366 | $8,867,789 | | Total Current Liabilities | $1,488,131 | $1,099,419 | | TOTAL LIABILITIES | $1,574,845 | $1,208,738 | | Total Stockholders' Equity | $5,166,521 | $7,659,051 | - Total assets decreased from **$8.87 million** to **$6.74 million**, and total stockholders' equity decreased from **$7.66 million** to **$5.17 million**, indicating a reduction in the company's overall financial position[13](index=13&type=chunk)[14](index=14&type=chunk) [Consolidated Statements of Operations and Other Comprehensive Loss](index=3&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS%20AND%20OTHER%20COMPREHENSIVE%20LOSS) Consolidated Statements of Operations Highlights (Nine Months Ended May 31) | Metric | 2025 | 2024 | Change (YoY) | | :-------------------------------- | :----------- | :----------- | :----------- | | Revenue | $531,923 | $380,278 | +39.88% | | Gross profit | $529,203 | $375,456 | +40.95% | | Total operating expenses | $9,721,343 | $3,925,522 | +147.64% | | Loss from operations | $(9,192,140) | $(3,550,066) | +158.93% | | Net loss | $(9,214,206) | $(3,622,083) | +154.40% | | Basic and diluted loss per share | $(0.53) | $(0.32) | +65.63% | - Revenue increased significantly by **39.88%** for the nine months ended May 31, 2025, compared to the prior year, but this was overshadowed by a substantial **147.64%** increase in total operating expenses, leading to a **154.40%** increase in net loss[15](index=15&type=chunk)[16](index=16&type=chunk) [Consolidated Statements of Stockholders' Equity](index=4&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20STOCKHOLDERS%27%20EQUITY) Stockholders' Equity Changes (Nine Months Ended May 31, 2025) | Metric | August 31, 2024 | May 31, 2025 | | :-------------------------------- | :-------------- | :----------- | | Common Stock Shares | 15,810,205 | 19,559,179 | | Common Stock Amount | $15,810 | $19,559 | | Additional Paid-in Capital | $59,599,178 | $66,378,362 | | Accumulated Deficit | $(51,558,772) | $(60,764,775)| | Total Stockholders' Equity | $7,659,051 | $5,166,521 | - The company issued **3,748,974 common shares** and raised significant additional paid-in capital, but the accumulated deficit increased by **$9.2 million**, leading to a decrease in total stockholders' equity[18](index=18&type=chunk)[19](index=19&type=chunk) [Consolidated Statements of Cash Flows](index=5&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Consolidated Cash Flow Highlights (Nine Months Ended May 31) | Cash Flow Activity | 2025 | 2024 | | :-------------------------------- | :------------- | :------------- | | Operating Activities | $(7,807,889) | $(3,067,344) | | Investing Activities | $(85,141) | $(119,018) | | Financing Activities | $6,046,163 | $10,315,207 | | Net change in cash for the period | $(1,908,124) | $7,106,979 | | Cash at end of period | $4,591,761 | $8,459,081 | - Net cash used in operating activities significantly increased to **$7.8 million** in 2025 from **$3.1 million** in 2024, while cash provided by financing activities decreased from **$10.3 million** to **$6.0 million**, resulting in a net decrease in cash for the period[21](index=21&type=chunk) [Notes to the Interim Consolidated Financial Statements](index=6&type=section&id=NOTES%20TO%20THE%20INTERIM%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) - Lexaria Bioscience Corp. is a biotechnology company focused on enhancing the bioavailability of active pharmaceutical ingredients (API) using its proprietary DehydraTECH drug delivery technology, with a current focus on GLP-1 and GIP drugs[24](index=24&type=chunk) - The company's recurring losses and negative net cash flows raise substantial doubt about its ability to continue as a going concern, with existing cash expected to fund operations only through **Q3 fiscal year 2026**[27](index=27&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk) - Revenue is primarily generated from licensing contracts for DehydraTECH technology and third-party contracted manufacturing of DehydraTECH-enhanced products[25](index=25&type=chunk) Revenue Breakdown (Nine Months Ended May 31) | Revenue Type | 2025 | 2024 | | :------------- | :--------- | :--------- | | IP Licensing | $522,000 | $373,990 | | B2B | $9,923 | $5,388 | | Other | $- | $900 | | Total | $531,923 | $380,278 | - Two customers accounted for **100%** of consolidated revenues in the nine months ended May 31, 2025, highlighting significant customer concentration[67](index=67&type=chunk) Intellectual Property, Net (May 31, 2025 vs. August 31, 2024) | Metric | May 31, 2025 | August 31, 2024 | | :---------------- | :----------- | :-------------- | | Balance – beginning | $516,676 | $462,625 | | Additions | $60,496 | $145,591 | | Impairment | $(33,540) | $(57,836) | | Amortization | $(27,212) | $(33,704) | | Balance – ending | $516,420 | $516,676 | - The company recognized an impairment loss of **$33,540** on abandoned patent applications during the nine months ended May 31, 2025[79](index=79&type=chunk) Issuances of Common Shares and Warrants (Nine Months Ended May 31, 2025) | Event | Shares Issued | Gross Proceeds | Net Proceeds | | :-------------------------------- | :------------ | :------------- | :----------- | | April 28, 2025 Equity Offering | 2,000,000 | $2.0 million | $1.7 million | | February 2025 ATM Offering | 6,585 | - | $11,720 | | October 16, 2024 Equity Offering | 1,633,987 | $5.0 million | $4.5 million | | October 2024 ATM Offering | 8,402 | $26,146 | - | - Stock-based compensation expense increased to **$736,770** for the nine months ended May 31, 2025, from **$395,726** in the prior year, reflecting increased equity awards[93](index=93&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=16&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes Lexaria's financial condition, operations, DehydraTECH technology, R&D, financings, and substantial going concern risk [Company Overview](index=17&type=section&id=Company%20Overview) - Lexaria's core business is its DehydraTECH drug delivery platform, designed to improve the bioavailability of Active Pharmaceutical Ingredients (API) into the bloodstream and brain tissue, applicable across pharmaceuticals, foods, beverages, cosmetics, and nutraceuticals[105](index=105&type=chunk) [Research & Development](index=17&type=section&id=Research%20%26%20Development) - DehydraTECH-enhanced liraglutide and certain CBD formulations outperformed Rybelsus® in lowering blood sugar and controlling body weight in a **12-week GLP-1 Diabetes Animal Study (WEIGHT-A24-1)**[106](index=106&type=chunk) - A human pilot study (GLP-1-H24-3) on DehydraTECH-enhanced tirzepatide showed a **47% reduction in adverse events**, comparable blood glucose reduction, and increased insulin levels compared to Zepbound® injections[108](index=108&type=chunk)[122](index=122&type=chunk) - The Australian Phase 1b **12-week chronic clinical study (GLP-1-H24-4)** for DehydraTECH formulated cannabidiol, semaglutide, and tirzepatide has completed participant enrollment, with full results expected in **Q4 calendar-2025**[109](index=109&type=chunk)[123](index=123&type=chunk) - A human pilot study (GLP-1-H25-5) on DehydraTECH-enhanced liraglutide showed a **22.7% reduction in adverse events**, including a **67% reduction in nausea**, compared to Saxenda® injections, supporting a potential 505(b)2 new drug application pathway[110](index=110&type=chunk)[125](index=125&type=chunk) - The FDA granted a 'Study May Proceed' letter for the HYPER-H23-1 Phase 1b IND trial for DehydraTECH-CBD to reduce hypertension, but the study is on hold due to budgetary constraints[129](index=129&type=chunk) [Financings](index=18&type=section&id=Financings) - The company completed several equity offerings, including a **$2.0 million** gross proceeds offering in April 2025 and a **$5.0 million** gross proceeds offering in October 2024, along with ATM offerings[112](index=112&type=chunk)[115](index=115&type=chunk) [Corporate Governance](index=18&type=section&id=Corporate%20Governance) - John Docherty was re-engaged as President and Chief Science Officer, and a Scientific Advisory Board was created, comprising Dr. Michael Gibson, Dr. Karen Aust, and Dr. Philip Ainslie[113](index=113&type=chunk)[116](index=116&type=chunk) [Patents](index=18&type=section&id=Patents) - Lexaria's patent portfolio includes applications and grants for DehydraTECH compositions and methods to improve API bioavailability and palatability for cannabinoids, fat-soluble vitamins, NSAIDs, and nicotine[113](index=113&type=chunk) - Patents have been filed specifically for DehydraTECH with GLP-1/GIP drugs to support ongoing cardiometabolic clinical research and for diabetes/weight loss[114](index=114&type=chunk) [Off-Balance Sheet Arrangements](index=21&type=section&id=Off-Balance%20Sheet%20Arrangements) - The company has no off-balance sheet arrangements that are material to its financial condition or results of operations[130](index=130&type=chunk) [Critical Accounting Policies and Estimates](index=21&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - Management did not identify any new critical accounting estimates for the nine months ended May 31, 2025, beyond those disclosed in the annual report[132](index=132&type=chunk) [Funding Requirements](index=22&type=section&id=Funding%20Requirements) - Expenditures are expected to increase due to ongoing R&D programs, particularly animal and human clinical trials for DehydraTECH formulations of GLP-1 drugs and hypertension treatment[133](index=133&type=chunk) - The company incurred net losses of **$9.2 million** and **$3.6 million** for the nine months ended May 31, 2025 and 2024, respectively, primarily funded through common stock sales[134](index=134&type=chunk)[135](index=135&type=chunk) [Results of Operations for the Period Ended May 31, 2025, and May 31, 2024](index=22&type=section&id=Results%20of%20Operations%20for%20the%20Period%20Ended%20May%2031%2C%202025%2C%20and%20May%2031%2C%202024) Key Financial Results (Nine Months Ended May 31) | Metric | 2025 | 2024 | Change | | :-------------------------- | :----------- | :----------- | :----------- | | Revenue | $531,923 | $380,278 | +$151,645 | | Cost of goods sold | $(2,720) | $(4,822) | +$2,102 | | Research & development | $(6,356,637) | $(1,393,359) | $(4,963,278) | | Consulting fees & salaries | $(1,922,449) | $(1,002,473) | $(919,976) | | Legal and professional | $(449,890) | $(619,064) | +$169,174 | | Other general & administrative | $(992,367) | $(910,626) | $(81,741) | | Other income (loss) | $(22,066) | $(72,017) | +$49,951 | | Net Loss | $(9,214,206) | $(3,622,083) | $(5,592,123) | - Revenue increased by **$151,645**, driven by higher license fees and B2B sales, but R&D expenses surged by **$4.96 million** due to clinical trials and GLP-1 studies, and consulting fees/salaries increased by **$919,976** due to executive transitions and equity awards[138](index=138&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk)[141](index=141&type=chunk) - Legal and professional fees decreased by **$169,174** due to lower accounting and financing-related costs, while other general and administrative expenses increased by **$81,741**, mainly due to foreign currency transaction losses[143](index=143&type=chunk)[144](index=144&type=chunk) [Liquidity and Financial Condition](index=23&type=section&id=Liquidity%20and%20Financial%20Condition) Working Capital and Cash Flows (May 31, 2025 vs. August 31, 2024) | Metric | May 31, 2025 | August 31, 2024 | | :-------------------------------- | :----------- | :-------------- | | Net working capital | $4,318,647 | $6,798,567 | | Cash flows used in operating activities | $(7,807,889) | $(3,067,344) | | Cash flows used in investing activities | $(85,141) | $(119,018) | | Cash flows provided by financing activities | $6,046,163 | $10,315,207 | | Net change in cash for the period | $(1,908,124) | $7,106,979 | - Net cash used in operating activities increased significantly to **$7.8 million**, primarily due to a **$5.6 million** increase in net loss, partially offset by non-cash expenses and working capital changes[146](index=146&type=chunk) - Net cash from financing activities decreased to **$6.0 million** from **$10.3 million**, mainly due to lower proceeds from common share sales and fewer warrant exercises[148](index=148&type=chunk) - The company's recurring losses and negative net cash flows raise substantial doubt about its ability to continue as a going concern, with current cash expected to fund operations only through **Q3 fiscal year 2026**[149](index=149&type=chunk)[150](index=150&type=chunk)[152](index=152&type=chunk) [Item 3. Controls and Procedures](index=25&type=section&id=Item%203.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective as of May 31, 2025, with no material changes in internal controls over financial reporting during the quarter - Disclosure controls and procedures were deemed effective at a reasonable assurance level as of May 31, 2025[157](index=157&type=chunk) - No material changes in internal controls over financial reporting occurred during the quarter ended May 31, 2025[159](index=159&type=chunk) PART II—OTHER INFORMATION [Item 1. Legal Proceedings](index=25&type=section&id=Item%201.%20Legal%20Proceedings) The company is not involved in any material legal proceedings, nor are its directors, executive officers, or affiliates in adverse proceedings - The company is not party to any material, pending, or existing legal proceedings[160](index=160&type=chunk) [Item 1A. Risk Factors](index=25&type=section&id=Item%201A.%20Risk%20Factors) The primary risk is substantial doubt about the company's ability to continue as a going concern, potentially impacting future financing and leading to investor losses - There is substantial doubt about the company's ability to continue as a going concern, which may affect its ability to obtain future financing and could require it to curtail or cease operations[162](index=162&type=chunk)[163](index=163&type=chunk) - If the company is unable to continue as a going concern, it may have to liquidate assets, and investors could lose all or part of their investment[164](index=164&type=chunk) [Item 2. Recent Sales of Unregistered Equity Securities](index=26&type=section&id=Item%202.%20Recent%20Sales%20of%20Unregistered%20Equity%20Securities) The company issued **70,000** share purchase warrants to H.C. Wainright & Co. LLC nominees for equity financing under a registration exemption during the quarter - The company issued **70,000** share purchase warrants with an exercise price of **$1.25**, expiring April 24, 2030, to nominees of H.C. Wainright & Co. LLC as consideration for equity financing[165](index=165&type=chunk) [Item 3. Rule 10b5-1 Trading Plans](index=26&type=section&id=Item%203.%20Rule%2010b5-1%20Trading%20Plans) No insiders entered into Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the fiscal quarter ended May 31, 2025 - No insiders, employees, or consultants entered into Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the fiscal quarter ended May 31, 2025[166](index=166&type=chunk) [Item 4. Exhibits, Financial Statement Schedules](index=26&type=section&id=Item%204.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists financial statements and exhibits filed as part of the Form 10-Q, including articles of incorporation, material contracts, and Sarbanes-Oxley Act certifications - The report includes financial statements, articles of incorporation, material contracts (e.g., Securities Purchase Agreement, Change Order to Project Agreement with Novotech), and Section 302 and 906 certifications[167](index=167&type=chunk)[169](index=169&type=chunk)

Core Insights - Lexaria Bioscience Corp. has received 2 new international patents, increasing its total patent portfolio to 50 [1][2] - The new patents include one for treating epilepsy and another for sublingual delivery of nicotine, enhancing Lexaria's intellectual property protection [2][3] - The epilepsy drug market was valued at US$9.5 billion in 2023 and is projected to exceed US$15 billion by 2032, indicating significant growth potential [4] - The global retail oral nicotine market was valued at US$5.5 billion in 2023 and is expected to grow at a rate of 26% per year until at least 2030 [5] Company Developments - Lexaria's new patent for epilepsy treatment broadens its intellectual property protection outside the USA, where it already holds 6 existing patents [2] - The new patent for sublingual delivery of nicotine adds to existing patents in the USA and Canada, further solidifying Lexaria's position in the nicotine market [3] - The new patents are seen as a strategic move to enhance commercial opportunities within the pharmaceutical industry and to build long-term value for shareholders [2] Market Context - Approximately 50 million people in the US are affected by epilepsy, highlighting a substantial patient population for potential treatments [4] - The nicotine pouch market, where Lexaria's DehydraTECH™ technology has shown absorption benefits, is expected to reach US$25.4 billion in revenue by 2030 [5] - Lexaria's DehydraTECH™ technology improves the delivery of active pharmaceutical ingredients, demonstrating increased bio-absorption and effectiveness across the blood-brain barrier [6]

Core Insights - Lexaria Bioscience Corp. will participate in the BIO International Convention in Boston from June 16-19, 2025, aiming to advance discussions with potential partners and investors [1][2] Company Overview - Lexaria is a global innovator in drug delivery platforms, specifically through its patented DehydraTECH® technology, which enhances drug absorption and reduces side effects [4] - The company holds 48 granted patents and has additional patents pending worldwide, showcasing a strong intellectual property portfolio [4] Event Participation - The BIO International Convention is the largest biotechnology convention globally, featuring over 1,500 exhibitors and 20,000 attendees, providing a platform for networking and collaboration [2] - Lexaria is arranging one-on-one meetings with corporate leaders in sectors such as weight loss, diabetes, and hypertension, with limited meeting slots still available [3]

Core Insights - Lexaria Bioscience Corp. has entered into a Material Transfer Agreement (MTA) with a pharmaceutical company to evaluate its DehydraTECH technology in pre-clinical studies [1][2] - Initial pre-clinical studies have been completed, focusing on pharmacokinetics in animals, but results will not be disclosed [2] - Lexaria is preparing for strategic discussions with the pharmaceutical company's clinical development team regarding potential human clinical studies [3] Company Overview - Lexaria's DehydraTECH is a patented drug delivery platform that enhances the absorption of various drugs through oral delivery, aiming to improve bio-absorption and reduce side effects [4] - The company holds a strong intellectual property portfolio with 48 patents granted and additional patents pending globally [4]

Core Viewpoint - Lexaria Bioscience Corp. successfully closed a registered direct offering, raising $2.0 million by selling 2,000,000 shares at $1.00 each, minimizing dilution for existing shareholders by avoiding the issuance of new warrants, except for pre-funded warrants [1][2][3]. Group 1: Offering Details - The offering involved a single institutional investor purchasing 2,000,000 shares of common stock or pre-funded warrants at a price of $1.00 per share [1]. - The gross proceeds from the offering were $2.0 million before deducting placement agent fees and other expenses [3]. - H.C. Wainwright & Co. acted as the exclusive placement agent for the offering [2]. Group 2: Use of Proceeds - The net proceeds from the offering will be used for working capital and other general corporate purposes [3]. Group 3: Company Background - Lexaria operates a patented drug delivery platform, DehydraTECH™, which enhances the absorption of various drugs through oral delivery [6]. - The company holds a robust intellectual property portfolio with 48 patents granted and additional patents pending worldwide [6].

Technology and Product Development - Lexaria's DehydraTECH technology improves the delivery of Active Pharmaceutical Ingredients (API), enhancing bioavailability and potentially lowering overall dosing[107] - In a recent study, DehydraTECH-enhanced liraglutide and certain CBD formulations outperformed Rybelsus® in lowering blood sugar and controlling body weight[109] - The company reported a 47% reduction in adverse events for DehydraTECH-tirzepatide compared to Zepbound®, with comparable blood glucose and insulin level reductions[111] - The company initiated a Phase 1b clinical study in Australia for DehydraTECH Cannabidiol in combination with GLP-1 agonists for diabetes treatment[114] - An Ethics Board approved a new pilot study investigating an oral version of liraglutide using DehydraTECH, aiming to demonstrate safety and pharmacokinetic performance[115] - Lexaria's patent portfolio includes applications for DehydraTECH with cannabinoids for treating heart disease and hypertension, as well as for diabetes and weight loss[118] - Lexaria's primary clinical research areas include DehydraTECH-powered GLP-1/GIP drugs and CBD for diabetes and hypertension treatment[123] Financial Performance - Lexaria reported a net loss of $5,423,600 for the six months ended February 28, 2025, compared to a net loss of $1,837,771 for the same period in 2024, reflecting an increase of $3,585,829[139] - Revenues increased to $357,923 for the six months ended February 28, 2025, up from $296,278 in the prior year, with licensing fees and B2B sales rising by $58,010 and $4,535, respectively[140] - Research and development expenditures surged by $2,818,866 year-over-year, primarily due to the advancement of GLP-1 studies and the manufacturing of Investigational Drug Product[141] - Consulting fees and salaries rose by $572,909, attributed to the transition of the former CEO and the hiring of a new CEO and CFO[142] - Legal and professional fees increased by $25,154 due to higher accounting and professional service costs associated with registration filings[143] - General and administrative expenses grew by $281,390, driven by increased advertising costs and foreign currency transaction losses[144] - Cash flows used in operating activities were approximately $4.2 million for the six months ended February 28, 2025, compared to $1.8 million in the prior year[146] - The company raised $4.4 million in net proceeds from securities sales during the six months ended February 28, 2025, down from $5.3 million in the same period in 2024[149] Financial Position and Concerns - As of February 28, 2025, the company had a working capital of $5,901,986, down from $6,798,567 as of August 31, 2024[145] - The company has an accumulated deficit of $57.0 million as of February 28, 2025, and expects to continue incurring significant operational expenses and net losses in the upcoming 12 months[150] - As of February 28, 2025, the company had cash and cash equivalents of approximately $6.5 million to settle $1.8 million in current liabilities[153] - The company has substantial doubt regarding its ability to continue as a going concern for at least one year following the date of the financial statements[153] - The company intends to fund operations and working capital for the twelve-month period following February 28, 2025 through equity financing arrangements and potential collaborations or strategic partnerships[153] - There is no assurance that the company will have sufficient funds to execute its intended business plan or generate positive operating results[154] - The consolidated financial statements do not include any adjustments related to the uncertainty of the company's ability to continue as a going concern[155]

Core Viewpoint - Lexaria Bioscience Corp. announced positive pharmacokinetic results from its Human Study 3, demonstrating that its oral DehydraTECH-tirzepatide can achieve comparable blood concentration levels to the injected Zepbound® [1][2][10] Study Design and Results - The study involved 10 participants receiving a weekly injection of Zepbound® and 9 participants taking DehydraTECH-tirzepatide capsules daily over the same period [3] - Peak blood levels for injected Zepbound® were generally higher but showed a decline after Day 2, while DehydraTECH-tirzepatide levels increased steadily and were still rising on Day 8 [4][5] - 80% of injected participants experienced peak levels on Day 2, whereas 50% of DehydraTECH-tirzepatide participants peaked on the final day, indicating ongoing absorption [4] Side Effects and Efficacy - DehydraTECH-tirzepatide showed a 47% reduction in adverse events compared to injected Zepbound®, with only 20 adverse events reported for the oral version versus 38 for the injection [5][6] - Gastrointestinal side effects were reduced by 54% with DehydraTECH-tirzepatide, while glycemic performance indicators remained comparable between the two formulations [6] Future Studies - The company is conducting a 12-week study in Australia to further evaluate the effectiveness of DehydraTECH-tirzepatide, with dosing starting at 20 mg/day and escalating to 40 mg/day [7][8] - The ongoing study aims to assess steady-state blood levels over an extended duration, which could position Lexaria as a significant player in the GLP-1 weight loss and diabetes control markets [7][8] Competitive Landscape - Currently, there is no oral version of tirzepatide available, as it is only sold as an injection [9][12] - Lexaria's DehydraTECH technology has previously shown promise in delivering other GLP-1 drugs, indicating potential for a competitive oral alternative in the market [11][12]

Core Insights - Lexaria Bioscience Corp. is pursuing the development of the world's first orally-dosed liraglutide using its DehydraTECH technology, which enhances drug delivery [1][2] - The company has filed patent applications for this new formulation, aiming to capitalize on the recent off-patent status of liraglutide [2] - Positive results from animal studies indicate that DehydraTECH-liraglutide outperformed existing oral treatments in controlling blood sugar and body weight [3] - Lexaria is also preparing for human clinical trials to further validate the efficacy and safety of its oral liraglutide formulation [5][6] Company Strategy - Lexaria's strategy includes simultaneous research on leading GLP-1/GIP drugs, with a market potential estimated at $30 billion in 2024, a significant increase from $300 million in 2018 [4] - The company aims to expedite its entry into the GLP-1 market by initiating pilot clinical testing of DehydraTECH-liraglutide [5] - If successful, the company plans to pursue regulatory approval from the FDA for its orally-dosed liraglutide, potentially in collaboration with Novo Nordisk, the original developer of liraglutide [6] Market Context - Currently, liraglutide is only available in injectable forms, generating substantial revenue for Novo Nordisk, with $849 million from Saxenda and $1.6 billion from Victoza in the first half of 2024 [7] - The introduction of an oral version could disrupt the market and provide a competitive edge for Lexaria, especially given the lack of existing oral formulations [2][7] - Liraglutide has shown additional benefits beyond diabetes management, including cognitive decline reduction, which may enhance its market appeal [8] Technology Overview - DehydraTECH is a patented drug delivery technology that improves the absorption of active pharmaceutical ingredients through oral administration [9] - The technology has demonstrated the ability to enhance bio-absorption and effectively deliver drugs across the blood-brain barrier [9] - Lexaria holds a robust intellectual property portfolio with 48 patents granted and additional patents pending, positioning it well for future innovations [9]

Technology and Research - Lexaria's DehydraTECH technology enhances the delivery of Active Pharmaceutical Ingredients (APIs), improving bioavailability and potentially lowering overall dosing[98] - During the three months ended November 30, 2024, Lexaria completed a GLP-1 Diabetes Animal Study with 72 diabetic rats, showing that DehydraTECH-enhanced formulations outperformed Rybelsus® in lowering blood sugar and controlling body weight[99] - Lexaria's Phase 1b study in Australia will involve 80 overweight or obese patients to investigate the efficacy of DehydraTECH-CBD and DehydraTECH-enhanced semaglutide compared to Rybelsus®[103] - The company is advancing R&D activities in both preclinical and clinical programs, focusing on DehydraTECH-powered GLP-1/GIP drugs and CBD for diabetes and hypertension[115] - Lexaria completed dosing for a human pilot study involving nine healthy volunteers, investigating DehydraTECH-tirzepatide capsules with no serious adverse events reported[116] - The company has received Ethics Board Approval for its Australian clinical study on DehydraTECH Cannabidiol and GLP-1 agonists[107] - Lexaria's patent portfolio includes applications for the use of DehydraTECH with cannabinoids for treating heart disease, hypertension, epilepsy, and diabetes[110] - The company entered into a Project Agreement with Novotech for conducting its Australian clinical study on DehydraTECH Cannabidiol[107] - Lexaria's ongoing studies include a comprehensive analysis of liver and kidney function and blood chemistry related to its recent animal studies[100] - DehydraTECH-liraglutide and DehydraTECH-CBD formulations showed body weight loss of 11.53% and 10.65%, and blood sugar reduction of 11.13% and 3.35%, outperforming the Rybelsus® control group[118] - Lexaria plans a Phase 1b study in Australia with 80 overweight or diabetic patients to evaluate the efficacy of DehydraTECH formulations[119] Financial Performance - Net loss for the three months ended November 30, 2024, was $2,706,628, compared to $1,185,038 for the same period in 2023, reflecting an increase of $1,521,590[134] - Revenue for the three months ended November 30, 2024, was $183,923, an increase of $32,645 from $151,278 in the same period last year[134] - Research and development expenditures increased by $1,378,729 year-over-year, primarily due to the manufacturing of the Investigational Drug Product for the Phase 1b Clinical Trial[136] - The company raised $4.3 million in net proceeds from the sale of securities during the three months ended November 30, 2024[132] - Current assets as of November 30, 2024, were $8,825,741, with current liabilities of $297,798, resulting in net working capital of $8,527,943[140] - Cash flows used in operating activities were approximately $2.73 million for the three months ended November 30, 2024, compared to $1.18 million in the same period in 2023[141] - The company anticipates increased expenditures related to ongoing R&D programs and expects to incur operating losses and negative cash flows for the foreseeable future[129] - As of November 30, 2024, the company had an accumulated deficit of $54.26 million, raising substantial doubt about its ability to continue as a going concern[143] Share Issuance and Control - The company issued 1,633,987 shares at $3.06 per share, raising gross proceeds of $5.0 million and net proceeds of $4.5 million during the same period[105] - On October 16, 2024, the Company issued 1,633,987 shares of common stock at a price of $3.06 per share, resulting in gross proceeds of $5.0 million and net proceeds of $4.5 million[147] - The Company concurrently issued 4,551,019 share purchase warrants, allowing the holder to purchase shares at $3.06 per share for five years[147] - In October 2024, the Company sold 8,402 shares through an At the Market (ATM) offering, generating gross proceeds of $26,146[147] - As of November 30, 2024, the Company's disclosure controls and procedures were deemed effective at a reasonable assurance level[148] - There were no changes in internal controls over financial reporting during the quarter ended November 30, 2024, that materially affected the controls[150] - The Company is not involved in any material legal proceedings against itself or its subsidiaries[151]

Clinical Trials and Research - Lexaria's final results from its human pilot study indicated that DehydraTECH-enhanced Rybelsus™ achieved sustained higher levels of semaglutide in blood, faster peak drug delivery, reduced side effects, and lower blood glucose levels after eating [111]. - The company filed an Investigational New Drug (IND) application with the FDA for a phase 1b hypertension clinical trial for its DehydraTECH-CBD drug product, receiving a Study May Proceed letter on February 29, 2024 [112]. - Interim findings from a study on DehydraTECH-semaglutide showed sustained higher levels of semaglutide in blood and reduced side effects, with final results confirming these benefits [120]. - A human pilot study for DehydraTECH-semaglutide has commenced, with the first two dosing arms completed, focusing on tolerability and blood sugar control [142]. - The company plans to initiate a chronic human study in Q3 2024, involving 60 to 80 obese, pre-diabetic, and/or type-2 diabetic volunteers, to evaluate the effectiveness of DehydraTECH-processed semaglutide [144]. - Lexaria has selected a CRO for a new human pilot study on DehydraTECH-tirzepatide capsules, expected to be completed by the end of June 2024 [123]. - The company is conducting a comprehensive R&D program to evaluate DehydraTECH for improved delivery of GLP-1 and GIP drugs, targeting commercial partnerships with global pharmaceutical companies [141]. Financial Performance - Total revenue for the nine months ended May 31, 2024, was $380,278, compared to $195,467 for the same period in 2023, representing a 94% increase [128]. - Revenue for the three months ended May 31, 2024, was $84 million, a 8.3% increase from $77.7 million for the same period in 2023 [160]. - Gross profit for the nine months ended May 31, 2024, was $375.5 million, compared to $164 million for the same period in 2023, representing a 128.5% increase [160]. - Total operating expenses for the three months ended May 31, 2024, were $1.83 million, a decrease of 26% from $2.47 million for the same period in 2023 [160]. - Net loss attributable to Lexaria shareholders for the nine months ended May 31, 2024, was $3.61 million, compared to $5.43 million for the same period in 2023, reflecting a 33.5% improvement [160]. - Basic and diluted loss per share for the three months ended May 31, 2024, was $(0.13), compared to $(0.37) for the same period in 2023 [160]. - The Company reported net losses of $3,622,083 and $5,463,510 for the nine-month periods ended May 31, 2024, and 2023, respectively [214]. Capital and Funding - Lexaria raised $3.0 million from a registered direct offering on February 16, 2024, issuing 1,444,741 shares of common stock and 113,702 pre-funded warrants [113]. - The company has entered into a Securities Purchase Agreement, resulting in net proceeds of $1.25 million from a registered direct offering and concurrent private placement [152]. - The Company raised gross proceeds of $4,407,444 from a Warrant Exercise Agreement on April 30, 2024 [220]. - The Company issued 889,272 shares of common stock and 729,058 pre-funded warrants on October 3, 2023, with net proceeds totaling $1.25 million [220]. - The company reported an accumulated deficit of $(49.37) million as of May 31, 2024, compared to $(45.76) million as of August 31, 2023 [182]. Assets and Liabilities - Total assets as of May 31, 2024, amounted to $10,018,437, up from $5,239,637 as of May 31, 2023, indicating a 91% increase [128]. - Total liabilities as of May 31, 2024, were $271.4 million, down from $403.9 million as of August 31, 2023 [182]. - Current assets increased to $9,093,379 as of May 31, 2024, compared to $2,151,213 as of August 31, 2023 [218]. - Net working capital improved to $8,937,331 as of May 31, 2024, up from $1,883,478 as of August 31, 2023 [218]. - The total present value of operating lease liabilities is reported at $115,327, with total lease payments amounting to $167,424 [127]. Intellectual Property - Lexaria's patent portfolio includes applications for DehydraTECH formulations for cannabinoids, fat-soluble vitamins, and other bioactive compounds, with ongoing investigations for patent protection expansion [115][116]. - The company is actively seeking beneficial acquisitions of intellectual property to enhance its portfolio and market position [135]. - Intellectual property assets increased to $498,878 as of May 31, 2024, compared to $462,625 as of August 31, 2023, reflecting a growth of 8% [159]. Other Developments - DehydraTECH technology is being evaluated for applications beyond pharmaceuticals, including foods, beverages, cosmetics, and nutraceuticals [131]. - The FDA provided a positive response regarding DehydraTECHCBD for hypertension treatment, and the Company submitted its IND application on January 29, 2024 [210]. - The Company plans to conduct long-term stability testing for DehydraTECH compositions over 6-12 months [209]. - The company has no off-balance sheet arrangements that could materially affect its financial condition [212].