Zacks Small Cap Research – LEXX: GLP-1 Agonist Program Updates – Technologist

By John Vandermosten, CFA

NASDAQ:LEXX

READ THE FULL LEXX RESEARCH REPORT

Lexaria Bioscience Corporation (NASDAQ:LEXX) reported fiscal third quarter 2024 results along with program updates, progress in its GLP-1 trials, a capital raise and a new role for the CFO. The investigational new drug (IND) application for hypertension was cleared in March and ethics board approval was given to start the second GLP-1 agonist human pilot study. Additionally, several new patents were granted bringing the total to 43. Lexaria’s primary focus this year is to demonstrate that DehydraTECH (DHT) can be an effective delivery system serving the burgeoning GLP-1 agonist space. Oral options for GLP-1s are limited and initial data for DHT-GLP-1s promising leading to the development of a series of studies that seek to find the best approach for a more convenient delivery method. So far, we have seen preliminary data for the animal studies which look at DehydraTECH (DHT) formulated cannabidiol (CBD), liraglutide and semaglutide. Since our latest report in April, we have updated all of the GLP-1 agonist study detail sections to reflect their latest status.

Third Quarter 2024 Results

Lexaria filed its 3Q:24 Form 10-Q on July 12th, 2024. The company reported 3Q:24 revenues of $84,000, and total operating expense of $1.8 million resulting in net loss of ($1.8) million or ($0.13) per diluted common share.

For the fiscal quarter ending May 31st, 2024 and versus the comparable prior year period:¹

➢ Revenue totaled $84,000, down 10% from $93,000 as increases in licensing revenues were more than offset by the absence of Product and Other revenues which together totaled $69,000 in the prior year. The rise in licensing revenues was due to an increase in minimum fees earned from the licensing agreement with Premier;

➢ Research and development expenses totaled $573,000, down 65% from $1,641,000 as a result of completing the manufacturing of DHT CBD drug for the company’s clinical studies, and the completion of other studies for nicotine replacement, diabetes and seizures. Existing spending is tied to the DHT investigational research programs underway in GLP-1 agonists and CBD;

➢ General and administrative expenses totaled $1,254,000 up 52% from $823,000 due primarily to an increase in legal and professional fees due to patent filings and other miscellaneous legal advisory work. This was partially offset by lower consulting fees, departure of two employees and lower advertising and promotion;

➢ Other loss of ($41,000) represented unrealized loss on marketable securities related to a rise in stock price during 3Q:24;

➢ Net loss was ($1.8) million, or ($0.13) per share, compared to net loss of ($2.4) million or ($0.37) per share.

As of May 31, 2024, cash and marketable securities totaled $8.5 million which compares to $1.5 million at the end of fiscal year 2023. Cash burn for the first nine months of FY:24 was approximately ($3.2) million. Cash from financing totaled $10.3 million over the last three quarters due to the exercise of warrants in the latest quarter and warrant issue and equity sales earlier in the fiscal year. Management estimates that the company holds sufficient cash to meet its financial obligations until at least summer of 2025.

Diabetes and Weight Loss GLP-1 Agonist Program

Following the report of final data for the DehydraTECH (DHT)-Rybelsus comparison study, Lexaria outlined an extensive research and development program for 2024 in a January 16th press release. The goal of the work is to further characterize the pharmacokinetics of DHT-semaglutide delivery. Additionally, the company seeks to identify the commercial applicability of DHT-formulated versions of semaglutide, liraglutide and tirzepatide. With this end in mind, Lexaria has planned one animal and three human studies along with long-term stability testing of DHT compositions of GLP-1 agonists. All human studies will be investigator-initiated, non-registrational studies and will require certain approvals before beginning. Third-party laboratories will be used exclusively.

National Research Council of Canada (NRC) GLP-1 Agonist Research Program

In early May, Lexaria announced yet another GLP-1 agonist research program; this one with the National Research Council of Canada (NRC). The partnership with the NRC will help further characterize the mechanism of action for DHT-GLP-1 drugs. It may provide valuable data that will help in partnering discussions with commercialization partners. This program will evaluate the molecular properties of DHT-processed pure semaglutide using simulated gastric fluid, mimicking conditions in the human gut. Several tests will be run such as polyacrylamide gel electrophoresis, size exclusion chromatography, matrix assisted laser desorption ionization mass spectrometry and dynamic light scattering. The research will look at the oligomerization potential of DHT-processed pure semaglutide in gastric fluid which will support the data package that will result from the spectrum of studies that Lexaria is doing. The company expects this work to be complete in August.

Chronic Dosing Animal Study 🐁

In mid-May, Lexaria announced that the chronic dosing animal study had begun dosing the first 8 arms of the 12 arm study. It will be designated WEIGHT-A24-1 and will include 8 – 10 subjects in each arm. It is planned to run for 12 weeks to evaluate weight loss, pharmacokinetics and blood sugar control over the duration of the study. Following collection of the data, full analysis will be performed and results will be shared. DHT formulations of semaglutide and liraglutide, alone and together with DHT-CBD, will be evaluated. This study will incorporate both the synthetic N-acylated amino acid derivative of salicylic acid (SNAC) technology and a compounded formulation of semaglutide. A report of interim results was provided on July 17th in a press release and is discussed below.

A Health Canada licensed Canadian research laboratory was awarded the contract to run the study. Manufacturing of the CBD and GLP-1 compositions to be used in the study were completed in the spring. Lexaria provided details on each of the 12 study arms which will evaluate DHT CBD, DHT GLP-1 with reformulated Rybelsus, DHT GLP-1 pure semaglutide and combinations of these arms against a vehicle and positive control arm. The dosing arms included the following compositions:

➢ One pure liraglutide DHT;

➢ One pure semaglutide DHT;

➢ Two reformulated Rybelsus DHT; and

➢ Four different DHT CBD.

Work on the first eight arms has been completed and work on arms 9 – 12 has begun. Arms 9 and 10 will use the two best performing DHT CBD compositions along with the two best performing DHT semaglutide compositions.

Investigators estimate that over 1,500 samples will be taken from 72 rats for analysis. Body weight, glucose readings and brain tissue will be evaluated. Brain tissue will be examined to determine whether DHT is able to produce higher brain absorption compared with the non-DHT arms. The brain absorption is important as one of the proposed mechanisms of action for the GLP-1 agonists is its impact in the brain where it can regulate the appetite, particularly in the hypothalamus. Combined with delayed gastric emptying and other mechanisms, this approach provides a multi-pronged effort to help patients lose weight. Lexaria will seek to find if the DehydraTECH delivery of the GLP-1 agonists is able to achieve better central nervous system (CNS) delivery, thereby enhancing the brain regulation of the hunger mechanism.

Selected results from the first eight arms were shared with investors in a July 17th press release. The design of the animal study provided for unlimited food and water during its entire duration. In the first month of the study, prior to dosing of the treatment arms, the animals experienced a 10.9% weight gain. In the month after the start of dosing, DHT-liraglutide and DHT-CBD produced the greatest weight loss. Detail by arm is provided in the following exhibit.

Six animals were assigned to each group. Both semaglutide (group G) and liraglutide (group H) used DehydraTECH processing to deliver the GLP-1 agonists orally. The following exhibit provides a graphic comparison of the weight change following treatment administration.

56 days of treatment remain for the animals in the study. Results from this trial will guide the arms that will be populated in the final four study arms in cohort 2. Cohort 2 is expected to be complete in mid-October.

Human Pilot Study #2

Lexaria announced the start of the second human pilot study in early May following the independent third-party review board grant of approval. A July update announced that dosing was complete for all participants. The third and final arm is expected to be complete by early July. Nine healthy volunteers were administered a single dose of DHT-semaglutide (what we termed DHT-Rybelsus above) capsules, similar to the formulation used in the first human pilot study. An oral dissolvable DHT-semaglutide tablet was also administered to evaluate whether or not it can be effectively delivered using the sublingual/buccal tissue route. When all of the data is collected, tolerability, side effects, pharmacokinetics, and blood sugar control will be evaluated. As with the first human pilot study, the formulation of DHT-semaglutide will use Rybelsus tablets as source material for the composition.

Human Pilot Study #3

Planned for later in 2024, the third human pilot study will enroll up to eight healthy human volunteers. Subjects will be administered a single dose of DHT-tirzepatide, which will be compounded from Eli Lilly’s Zepbound and manufactured into capsules. Study endpoints include tolerability, pharmacokinetics and blood sugar. The trial will evaluate DHT effectiveness in combination with a dual action GLP-1 agonist and a glucose-dependent insulinotropic peptide (GIP) drug absent the SNAC formulation used in the Rybelsus semaglutide composition from the first two human pilot studies. As of late May, Lexaria has hired a contract research organization (CRO) to run the study.

Chronic Dosing Human Study

Planned for 3Q:24, a 70-90 subject human study in pre-diabetic and Type 2 diabetic individuals will dose daily using DHT-CBD and DHT-Rybelsus capsules. It will evaluate tolerability, pharmacokinetics, weight loss and blood sugar among other metrics over a 12-week period. While the study is not registered as a phased study, it is equivalent to a Phase Ib based on its design. The study seeks to compare the performance of DHT-CBD product with DHT-Rybelsus product both separately and together relative to a placebo arm. A secondary goal for the study is to confirm glycemic control and weight loss shown in the first pilot human study.

Lexaria anticipates that this trial will be run in Australia and will test the best performing formulations identified in previous studies. This includes Rybelsus as a positive control, DHT-CBD, DHT-semaglutide, DHT-CBD-semaglutide and DHT-tirzepatide. Results from this study should be available before the end of the year. A CRO was engaged to run the study which has begun preparations including a full clinical protocol design and writing in consultation with medical experts, regulatory authority submissions and data management planning.

Long Term Stability Testing

Lexaria will evaluate the chemical and microbiological purity and stability of select DHT compositions over a period of 6 to 12 months. Long-term stability is a necessary feature if the DHT-formulations are to be commercially successful and replace injectable versions of GLP-1 agonists.

Summary

Lexaria has continued the advancement of its GLP-1 agonist program providing several interim updates and demonstrating early signs of efficacy. The company has planned its studies to produce an effective delivery regimen that will be evaluated in its chronic dosing human study slated to begin in the fall. While the IND for the hypertension program has been cleared by the FDA, the highest and best use of Lexaria’s efforts is to find an effective oral delivery mechanism for sponsors in the GLP-1 agonist space. 2023 revenues for this product class were in excess of $31 billion and are expected to expand dramatically over the next several years.

GLP-1 agonists have shown safety and effectiveness in treating diabetes and weight loss, with the latter one of the most difficult indications to address over the last decades. This class of drug is now almost exclusively infused in patients which is costly, inconvenient and can result in wide variations in systemic drug concentration between administrations. While there is one oral formulation of a GLP-1 available, it offers limited bioavailability. If DehydraTECH is able to improve delivery systemically including the CNS, recognition by one or more the numerous commercial and in-development sponsors of products in this class could lead to a substantial revaluation in Lexaria’s share price. Furthermore, success in the ongoing studies could provide the ammunition necessary to negotiate with multiple large biopharmaceutical companies who can benefit from this technology to effectively deliver GLP-1s and other classes of drug orally.

SUBSCRIBE TO ZACKS SMALL CAP RESEARCH to receive our articles and reports emailed directly to you each morning. Please visit our website for additional information on Zacks SCR. 

DISCLOSURE: Zacks SCR has received compensation from the issuer directly, from an investment manager, or from an investor relations consulting firm, engaged by the issuer, for providing research coverage for a period of no less than one year. Research articles, as seen here, are part of the service Zacks SCR provides and Zacks SCR receives quarterly payments totaling a maximum fee of up to $40,000 annually for these services provided to or regarding the issuer. Full Disclaimer HERE.