Lexaria Bioscience Making Big Moves in the Lucrative GLP-1 Market

The history of scientific discovery is the history of happy accidents. Those serendipitous surprises which lead to ground-breaking discoveries that make even the most seasoned scientists say, “Well isn’t that strange!”. In the pharmaceutical industry, a single happy accident can instantly transform the fortunes of a developing company and vault it towards financial success for them and their shareholders.  

This is exactly what is happening with Kelowna, British Colombia based drug delivery platform innovator Lexaria Bioscience (NASDAQ: LEXX). A happy discovery about a year ago led to what they are hoping is a potential breakthrough in the lucrative and rapidly growing GLP-1 market.

Lexaria had previously been unable to find a more compelling application for DehydraTECH, their trademarked and patented technology. When DehydraTECH is applied to an existing drug, it boosts the way APIs (active pharmaceutical ingredients) enter the bloodstream and brain tissues, allowing them to work more effectively. Despite what the company felt was a ground-breaking piece of technology, with over 40 worldwide patents, this disruptive technology had not yet moved the market in a lasting way.

Lexaria’s CEO and Chairman of the Board Chris Bunka laments, “We'd been validating and building credibility for DehydraTECH, and achieved many incredibly important results in animal and human studies over the years. But we lacked an application for it that would really let our tech shine. We had to try a Hail Mary of some kind. And in 2023, it became obvious to me what that was.”

The idea started taking form from the unexpectedly positive results of an animal diabetes study that the Lexaria’s R&D team was running using DehydraTECH. They were looking to see if CBD processed with the DehydraTECH technology would lower triglyceride, cholesterol, and blood sugar levels in rodents. The study was successful – it achieved all three of these objectives - but there was an unforeseen result that left the company’s scientists and management team scratching their heads. Three days into the study, the rats, who typically got heavier from access to the unlimited food offered to them in the lab – started losing weight. Eight weeks later, they had lost an average of 7% of their total body weight.

That was unexpected: weight loss? From comparatively low doses of CBD?

Chris Bunka knew this was unusual, and was separately aware from the media bombardment, that GLP-1 (short for Glucagon-like peptide-1 agonists) drugs were producing meaningful weight loss. An idea was born. “Our earlier human clinical studies had already validated DehydraTECH CBD for hypertension control. The improved delivery kinetics of DehydraTECH processing of CBD had already shown that our tech can make it behave in a much more interesting way.”

In fact, Bunka’s early enthusiasm related to DehydraTECH-CBD was also validated in 2024, when the FDA granted clearance to Lexaria to conduct a registered Phase I human clinical trial for the purposes of treating hypertension. Even though the generic drug has little effect on blood pressure, when it was processed with DehydraTECH, it’s performance was greatly enhanced. What if the same rule held true with GLP-1  drugs?

Bunka and Lexaria turned their attention towards the exploding GLP-1 market -  the hottest corner of the pharmaceutical industry, projected to be valued at more than $100 billion annual dollar range by 2030. The goal was to see if using DehydraTECH technology in the delivery of GLP-1 drugs would increase their efficacy and reduce side effects.  

GLP-1 are a class of medications used to treat type 2 diabetes and obesity. The most well-known GLP-1 medication is semaglutide, sold under the brand names of Rybelsus, Ozempic, and Wegovy, which are all owned by the Danish multinational pharma giant Novo Nordisk. In 2018, Novo Nordisk started a relationship with Emisphere Technologies, a company that had developed an oral delivery technology similar to Lexaria’s. Studies had shown that Emisphere’s technology helped semaglutide absorb into the bloodstream at a higher rate than without it. And in 2020, Novo paid a total of $1.8 billion to buy Emisphere and put their technology into Rybelsus® tablets. Ever since, every Rybelsus® tablet contains Emisphere’s technology (Ozempic® and Wegovy®, while offering the same drug as Rybelsus®, are both delivered by needle injection and thus do not require any delivery technology).  

But Bunka had a hunch that the DehydraTECH technology might be even more effective than Emisphere’s, and now they’ve got some data to back up that thought. In late 2023, the company supported a small investigator-initiated human pilot study with seven people. They crushed Rybelsus tablets – which included the Emisphere delivery technology - into a powder, then formulated and processed the powder with the DehydraTECH formulation technology and put them back into a capsule. The clinicians then fed a single dose to the seven people  in the study. 24 hours later, their blood semaglutide levels were 44% higher than the control group who had taken regular Rybelsus tablets. As if those findings weren’t enough, they also discovered that the DehydraTECH-powered semaglutide provided superior blood-sugar control and reduced reported unwanted side effects compared to the Rybelsus control group.

When the company disclosed the results of this study, Lexaria’s valuation ballooned from $6 million to $45 million nearly overnight. Chris Bunka believes this is just the start of something even bigger: “We finally found the magic application where our technology is going to be of the most value and therefore, based on looking at these other companies that have been in the space, I think that our $45 million valuation is nonsensical. If we have more positive study results, this could be the type of investment that changes lives for investors, just like it changes lives for patients when the technology is used.”  

Bunka compares Lexaria’s potential trajectory with Viking Therapeutics (NASDAQ: VKTX), a pharma company with their own GLP-1 drug. Viking recently released the positive results of their own Phase II efficacy study, which saw the company’s valuation jump from $800 million to $8 billion in a single day. While Viking has a single GLP-1 drug, Lexaria’s delivery technology could potentially work with several different GLP-1 drugs. According to Chris Bunka, this makes Lexaria somewhat of a pharma unicorn. “In GLP-1, and in drug delivery technology, I am not aware of another company like us today. The only other drug delivery technology company that would have been a direct competitor was Emisphere. But they're no longer independent because Novo Nordisk bought them.”

2024 is a pivotal year for Lexaria. While the company has proven that their DehydraTECH technology, in conjunction with Emisphere’s technology already within the Rybelsus® tablets improves the absorption of semaglutide into the bloodstream, they haven’t yet shown that their technology alone will provide the same results. Their upcoming expanded series of human and animal studies will definitively answer that question. These include two more small human investigator-initiated pilot studies, a 12-week animal study, and one large Phase I, 12-week human study.

Bunka is hopeful that if Lexaria’s Phase I study is successful, it could put Lexaria on a similar trajectory to Emisphere in 2020; Viking a year ago, or Altimmune in recent months. “If our upcoming studies yield positive results, there is no reason that we shouldn’t experience valuation adjustments before the end of this year, just like those companies have experienced.”

Several companies are already knocking at Lexaria’s door, showing interest in the company’s technology, which has Chris Bunka very excited about the future. “If our study results continue to be positive, as I’m expecting, I believe Lexaria’s future is going to be radically different six months from now compared to today.”

This is all welcome news to potential investors, as Lexaria Bioscience finds itself in the right place, at the right time, in the hottest subsector of the life sciences market,  all thanks to a happy accident.

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