LEXX: 3Q:23 Financial Results & Corporate Updates

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By John Vandermosten, CFA

NASDAQ:LEXX

READ THE FULL LEXX RESEARCH REPORT

Lexaria Bioscience Corporation (NASDAQ:LEXX) has published a number of updates over the previous two months including the incorporation of a new subsidiary for consumer packaged goods (CPG) products, announcement of a new study in weight loss and diabetes control and initial data from the nicotine study. The company also reported its third quarter, fiscal year 2023 financial results.

3Q:23 Results

Lexaria filed its third quarter fiscal year 2022 Form 10-Q on July 14, 2023. The company reported 3Q:23 revenues of $93,000, and total operating expense of $2.5 million resulting in net loss of ($2.4) million or ($0.37) per basic and diluted common share.

For the third quarter ending May 31, 2023 and versus the same prior year period in 2022:

➢ Revenue totaled $93,000, down 7% from $100,000 on a decrease in Product revenues. These amounts were offset by an increase in intellectual property licensing and other sales;

➢ Gross profit declined to $80 from $81 while the product gross margin was up

➢ Research and development expenses totaled $1.6 million, up 118% from $752,000 tied to the multiple DehydraTECH investigational research programs underway, including analysis and execution of the hypertension, nicotine and diabetes studies;

➢ General and administrative expenses totaled $823,000, down by almost half from $1.2 million due primarily to a decrease in consulting fees, salary and stock-based compensation. Legal fees, advertising and promotion, and investor relations spending were also lower. This was partially offset by an increase in office expenses;

➢ Net loss was ($2.4) million, or ($0.37) per share, compared to net loss of ($2.4) million or ($0.41) per share.

As of May 31, 2023, cash and marketable securities totaled $3.4 million - a sequential ($0.1) million decline from the end of 2Q:23. Cash burn for the first nine months of FY:23 was approximately ($4.4) million.

CPG Product Subsidiary

Lexaria incorporated a new wholly-owned subsidiary called Lexaria Nutraceutical Corp. in order to optimize its DehydraTECH strategy that serves a number of markets that fall under different regulatory regimes worldwide. The strategy also enables Lexaria to more efficiently participate in M&A activity. The subsidiary, which is referred to as LEXX Nutra for short, has received a perpetual license to create consumer packaged goods and intermediate ingredients for any molecule save those associated with nicotine or cannabis. The subsidiary is also prevented from using the license to produce a pharmaceutical product. The parent also made modifications to other subsidiaries’ arrangements, amending the exclusive licensing rights of Lexaria Pharmaceutical Corp. to only pertain to the manufacture or licensing of pharmaceutical products, excluding nicotine.

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