LEXXW - Annual Letter from Lexaria CEO Chris Bunka and Thorough Strategic Update to All Stakeholders

(TheNewswire)

Kelowna, B C - TheNewswire - January 13, 2023 - Lexaria BioscienceCorp. ( XNAS :LEXX) ( XNAS :LEXXW) (the“Company” or “Lexaria”), a global innovator in drug deliveryplatforms is pleased to provide an annual letterfrom CEO, Chris Bunka and a thorough strategic update to allstakeholders.

CEO LETTER TO STAKEHOLDERS

As 2022 came to a close, it isn’t news that nearlyall companies – not to mention most people - are facing challengesnot experienced in years. Lexaria continues to navigate well and isfocused on those things it can control such as applied R&Ddesigned to entice others to work with us commercially.

Inflation rates running at 40-year highs have promptedinterest rates to rise at the fastest rate in decades with radicalchanges underway in the economy and in the financial markets. Supplychains everywhere have been disrupted by geopolitical trends, by thepandemic, and sadly, by war in Europe. Stock markets around the worldare experiencing the longest protracted decline since 2008, with thetechnology-heavy Nasdaq exchange down as much as 37% from November2021 to October 2022.

Despite this, Lexaria is forging ahead. Lexaria has notterminated any staff and in fact our in-house team as well as ourexternal consultant head-count has never been higher, in order toconduct and analyse an unprecedented volume of work. We’ve managedour growth while exercising excellent fiscal controls and have hit ourannual budgets, +/- about 2%, for the last two years running.

Our applied R&D is paying off in spades (even if the stock market does notreflect that.., yet) because we are currently in active discussionswith several multi-billion dollar companies around the world, for thepotential use of Lexaria’s DehydraTECH technology in theircommercial product pursuits. We have not disclosed the identities ofthese companies nor the progress of those relationships because of alack of materiality and to try to remain responsible to ourprospective corporate partners, our shareholders, and to avoid rankspeculation. These discussions are ongoing and have thus helped us tomeet one of our primary objectives of the last year which is tointroduce DehydraTECH to world-leading potential collaborators.

Below I will try to recap our progress of 2022 andindicate why I expect 2023 to be our best year ever. (All dates within this letter refer tocalendar periods, not fiscal periods.)

CAPITAL MARKETS

The “price” that development-stage companies likeLexaria pays for capital, is ownership – equity - of our company.That’s because we have to issue equity to receive money in ourtreasury that we use to conduct our operations. After raising roughlyUS$15 million in 2021, we had no plans to raise additional funds in2022; and we did not. Thankfully, that deflected some of the hardshipassociated with the worst conditions in the stock markets in years,which would have been doubly painful had we raised any significantamount of capital at near record-low prices.

Our reference earlier in this letter to our strong costcontrols is a point of pride: because we are not spending moneyfoolishly, we have been able to hit our budgets even during a yearwhen inflationary pressures are at their highest in roughly 40 years.The Lexaria management team has done a great job of preserving ourprecious capital the best we can.

In fact, we’ve done such a good job of preservingcapital that we could survive through nearly all of 2023 withoutneeding to raise additional capital, if we cut back a little on ourR&D spending.  However, as we prefer to keep advancing ourapplied R&D at as rapid a pace as we can, we are also continuingto pursue capital-strengthening possibilities that do not involve theissuance of any equity.

We are not considering taking on any debt. That wouldbe a risky step for a company that has not reached profitablerevenue-based operations. Instead, we have been working all year ondeveloping specific corporate relationships that might obviate theneed for equity-linked capital.

In fact, most early-stage biotech and pharmaceuticalcompanies rely most heavily on licensing and R&Ddeals as a key component of theirgrowth strategies. Technology licensing deals vary greatly in theirspecifics, but usually include an up-front payment, defined milestonepayments as regulatory progress is made, and some sort of ongoingroyalty structure once in commercial use. Of most importance toLexaria shareholders today, both the up-front payment and the definedmilestone payments can be significant revenue streams long before (oreven whether or not) a product is ever offered for commercial sale.

This is a continuation of a strategy we began over twoyears ago, as we prepared for our uplist to the Nasdaq exchange andcapital raise in 2021. Our applied R&D programs completed sincethen have yielded almost entirely positive results – a crucialaccomplishment as we prepared to use those results to reinforce ouroutreach strategy to potential corporate partners. As a point of fact,I’ve always felt that the market never accurately valued ourpositive R&D results of 2021/22, because negative results couldhave created significant barriers with our hoped-for future corporate partners. Happily, we have been succeedingwith almost entirely positive R&D results.

It is a direct result of our positive R & Dprograms that, as 2023 begins, we are actively involved in severalsets of ongoing discussions and due diligence proceedings withpotential corporate partners with a goal of collaboration, DehydraTECHout-licensing, or other corporate relationships. As is true in severalsectors of the economy, pharma and biotech companies conduct deepinvestigatory programs into any technologies they are consideringutilizing and it is nearly impossible to provide “too much”information. Accordingly, typical due diligence investigations cantake several months to a year or more to complete. This is to beexpected as we will be seeking significant investments to useDehydraTECH technology in what are usually multi-billion-dollarmarkets and these potential corporatepartners cannot afford to make mistakes.

As such, I feel I and my team are delivering on astatement made in last year’s CEO letter:

“As we look towards 2022 and 2023,Lexaria is also taking steps to ensure we have multiple choices in howwe fund the Company. Some details must remain undisclosed for now andwill be revealed at the appropriate times, but in other respects weclearly are trying to position the Company for non-dilutive injectionsof capital through strategic partners and other commercialrelationships.”

SHAREHOLDER/MARKETACHIEVEMENTS

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As you can see from this chart, Lexaria’s stock hastracking the SP biotech index quite well since the summer of 2021though we seem to be slightly behind in recent months. ( The SP biotech index is shown with thegreen dotted line. ) In general, the biotechsector declined precipitously into about May 2022, and has not mademuch progress since. We of course are hopeful to begin outperformingthe broader biotech sector soon, and I believe we have good reasons tothink that might be the case, as you will see below.

I purchased an additional 38,500 shares of our commonstock in October, in the open market, to hold a little more than520,000 shares in total: I remain the largest shareholder of Lexariaand my conviction in the long-term prospects of this company isstronger than ever. My purchases reflect my vote of confidence in theCompany.

We’ve also been pleased to notice an increase ininstitutional ownership of our shares which I believe is a sign of“smart money” coming into our stock. Lexaria’s managementpresents to biotech analysts and responds to investors conductingserious due diligence on a regular basis.

According to data accessed at Nasdaq inNovember , ourinstitutional ownership reached 11.6% which was the highest it hadbeen during 2022. As a reminder, we only have 5.95 million sharesissued and outstanding, which is a very low number within our peergroup of companies.

The table below shows our ten largest institutionalshareholders according to their latest regulatory filings.Collectively, all our institutional shareholders own 690,344 sharesaccording to their disclosures.

Despite increases in our insider ownership, andinstitutional ownership, Lexaria’s stock price suffered in 2022.This has been exceptionally frustrating for the entire Lexaria team,especially in light of the significant progress made towards ourlonger, more sustainable corporate goals as described earlier. We willcontinue to do everything we can to improve our valuation in the eyesof the market and try to deliver valuation gains to ourshareholders.

FOOD AND DRUG ADMINISTRATIONREGISTRATION

Last year I told you that we would pursue a pre-IND(Investigational New Drug) meeting with the FDA to introduceDehydraTECH-CBD for the treatment of hypertension. Although itrequired more time than expected, we did have a successful pre-INDresponse from the FDA in July thatcleared our process to proceed toward formal IND filing. Since then,we have invested significant financial and human resources into thisproject and, although our steady progress has not warranted theissuance of press releases, we are getting closer and closer toregistering the formal IND program.

We hired a regulatory compliance firm over one year agoand their large team of highly skilled professionals are workingclosely with Lexaria’s President, John Docherty, and our researchscientists on a constant ongoing basis. Achieving FDA registration forour IND program will be a major accomplishment that we expect toachieve this year.

Below, I will describe our most significantR&D programs , some of which areintimately connected to our FDA registration project. Indeed, I havesaid repeatedly that Lexaria has, with a lot of forethought, completedfive human clinical studies already investigating DehydraTECH-CBD forits hypertension applications as a way of de-risking our futureendeavours, as much as we possibly can, for our shareholders andpotential corporate partners. These studies have been conducted at aEuropean academic research hospital to rigorous standards even though they were purposefully not registered with theFDA. In fact, two peer-reviewed articles have already been publishedas a result of our 2018 and 2021 human clinical studies, and severalmore manuscripts are under development or in process toward additionalpublications in  medical/science journals.

Our human clinical studies have been a vital componentof our efforts at building relationships with prospective corporatepartners; making it clear that our commercial efforts, our appliedR&D studies, and our regulatory pursuits are all intimatelyconnected.

Results from our already-completed human clinicalstudies have been an asset in our pre-IND meeting with the FDA, andwith our regulatory compliance firm, as we prepare for our Phase 1(b)FDA-registered study expected to begin this year for DehydraTECH-CBD.It is a fact that across our five human studies completed to date,involving more than 130 people altogether, we have not yet recordedeven a single serious adverse event. This is a major, significantaccomplishment as we prepare for our Phase 1(b) study, the primaryoutcome of which will be rigorous safety and tolerability testing topave the path toward product commercialization.

As verified with the FDA by way of our pre-IND meeting,Lexaria is envisioning its registered clinical trials ultimatelyculminating in filing of a 505(b)2 new drug application to obtaincommercial authorization.  The 505(b)2 pathway is advantageous because this pathway is consideredabbreviated, as it is often described, typically enabling a fasterroute to commercial approval than the traditional 505(b)(1) NDApathway.  In order to pursue the abbreviated 505(b)2 pathway, Lexariaintends to lever as much as possible the wealth of publicly available,precedent safety data for the established pharmaceutical Epidiolex®which has already demonstrated the safety and tolerability of chronicCBD dosing but at much higher doses than Lexaria intends to pursuewith its DehydraTECH-CBD hypertension program.  Of note, Lexariabelieves that its DehydraTECH-CBD offers advanced CBD deliveryperformance, including significant brain perfusion capabilities, inturn enabling enhanced pharmacological effectiveness at lowerdoses.

DehydraTECH-CBD for hypertension is not our onlylong-term plan for FDA registration. Stakeholders can follow ourprogress in other areas of therapeutic interest through the results wereceive in our applied R&D programs – since we are a companythat “follows the science”, you can generally assume that ourcommercial and regulatory interests often follow those areas ofinvestigation where we experience the most scientific success.

RESEARCH & DEVELOPMENT

If you’ve been following Lexaria for any period oftime you know that applied R&D is our lifeblood. It helps us establish areas ofinvestigation for commercial pursuits, reduces risks of the unknownfor both commercial and regulatory goals, and more. Indeed, I cannotsay it much better than I did last year:

“Meaningful national orinternational implementation of DehydraTECH is unrealistic prior tofull knowledge and understanding of its limitations and capabilities.Lexaria has been very brazen and transparent conducting these studiesin full public view compared to many pharma companies that keep thesesorts of investigations hidden within their walls and undisclosed.Every positive result we generate is one more step towards removingrisks associated with regulation and commercialization; eventually,with enough positive data, that formula will tilt in ourdirection.”

Our top priority during 2022 was clearly to develop ourDehydraTECH-CBD hypertensionprogram and this has been anunqualified success. Our second priority was to explore whether DehydraTECH-nicotine couldbe a replacement for damaging and deadly lung-based absorption methodsand a human clinical study in that program had a delayed start but iscurrently underway and expected to complete early in 2023.

Additionally, during 2022 we completed our first-everanimal study into DehydraTECH-CBD as an anti-seizure therapeutic andenjoyed success compared to one of the world’s leading existinganti-seizure drugs. We released partial studyresults in November 2022 thatreceived a lot of investor attention.

Hypertension andHeart Disease.

After the successful completion of severalhypertension-focused human clinical trials in 2021, we were pleased tocomplete dosing in July in our largest-ever human clinical trial; 66patients in our first extended multi-week study of DehydraTECH-CBD.

HYPER-H21-4 consisted ofmale and female volunteers between the ages of 40-70 with documentedor measured elevated blood pressure (120/80 to 139/80 mmHg), mild(stage 1) hypertension (140/90 to 159/99 mmHg) or moderate (stage 2)hypertension (160/100 to 179/109 mmHg) who received DehydraTECH-CBDevery day for a 5-week duration. DehydraTECH-CBD doses escalatedbetween 225 mg/day to 450 mg/day over the study duration adjustedrelative to body weight. Some volunteers were already using leadingstandard of care hypertension drugs such as angiotensin-convertingenzyme (“ACE”) inhibitors with or without diuretics and/or calciumchannel blockers, which helped evaluate the safety and efficacy ofDehydraTECH-CBD with and without other hypertension treatments.  Theextended duration of the study allowed Lexaria to gather critical datamonitoring the safety and efficacy of DehydraTECH-CBD over time toallow us to evaluate the potential for longer term healthbenefits.

At the time of writing this letter, we had releasedresults on blood pressure and on pharmacokineticperformance , both of which werepositive; and on the absence of any serious adverse events, which isalso positive. Given that these were the primary objectives of thestudy, it is accurate to say that HYPER-H21-4 was a success.  Inaddition, a series of secondary study objective evaluations aspreviously announced, are in progress and these findings will bereleased in due course if any of them are notable.

For 2023, and as noted above, our primary R&Dprogram is expected to be the launching of our FDA-registered INDprogram to formally investigate DehydraTECH-CBD for hypertension. Thissingle program is a large undertaking and will dominate our secondhalf of 2023 and beyond. Given its size we expect to conduct feweradditional smaller studies than we have in years past.

Nicotine.

Lexaria’s oral nicotine program is designed to offernicotine users less harmful alternatives to using nicotine, thansmoking or vaping; and, for potential pharmaceutical applications, todemonstrate a reliable and ethical method of using nicotine forpotential therapeutic use. Lexaria does not advocate the use of oralnicotine by anyone not currently using nicotine products, or nototherwise advised to by their doctor.

After a late- 2021 animalstudy wherein we demonstratedsuperiority in delivering nicotine in an oral pouch format forabsorption through the buccal tissues, we turned our attention toconducting a very similar study in humans. We faced repeated delays indoing so, first connected to global supply chain issues and thenrelated to manufacturing challenges and more, but our service provider begandosing the DehydraTECH oral-nicotinepouch to humans in December. Dosing in this study should be completeearly in 2023, during the first quarter.

We hope to demonstrate that the LexariaDehydraTECH-processed nicotine absorbs more quickly and moreefficiently into the human bloodstream than the world’s leading oralnicotine brand, Zyn™; or America’s third leading brand, On!™. Ifwe are successful, we feel this will be a major step towards adoptionof our technology into a consumer product, which could result in animportant commercial relationship developing in 2023. Of course, wecannot predict how third-party companies will respond to ourdevelopments, but in our view there seem to be clear advantages to anoral nicotine product that absorbs more quickly and has fewer sideeffects such as oral tissue aggravation, than existing brands.

Successful human testing would be the ultimatedemonstration of DehydraTECH’s technological superiority. AdditionalR&D into oral nicotine will be related to very specifictherapeutic use, or limited to formulation and or manufacturingimprovements that we might investigate during the year. If our humannicotine study is successful, we will then focus on commercializingour technology most desirably through partneringwith one or more leading global nicotine companies.

SeizureDisorders.

Our 2022 seizure-related R&D was slower to completethan we expected, but also delivered positive results. Just a weekprior to the end of 2022 we reported results from our animal seizurestudy program EPIL-A21-1 in which wedemonstrated certain performance enhancements compared to one of the world’s leading anti-seizuremedications, Epidiolex®.

This was a scientifically challenging study program toexecute and our third-party laboratory required more time than weplanned to conduct it. In general, DehydraTECH-CBD demonstrated agreater likelihood of inhibiting seizure activity and in a largerproportion of the tested animals, an apparent trend to be moreefficacious at lower doses than Epidiolex.

Although Epidiolex enjoys regulatory exclusivity forits noted medical conditions, its exclusivity provisions are nearingexpiration.  We said last year that our studies might help Lexariaattract commercial relationships and represent opportunities forDehydraTECH to enter commercial markets far more quickly than isgenerally thought.  Lexaria is very encouraged by our 2022 studyresults which represented our first-ever foray into this field, and weare considering possible opportunities for expanded investigationsgoing forward.

Given the success of the 2022 program, we areinternally rating our DehydraTECH-CBD for seizure investigation as oneof our highest priorities along with our DehydraTECH-CBD forhypertension and DehydraTECH-nicotine for oral use pursuits. Each ofthese three areas of investigation has the potential to supportimportant industry relationships that prove meaningful or eventransformative for Lexaria. Because of the obvious medical and marketneeds in each of these three sectors, we will be pursuing commercialrelationships in 2023 even as our R&D continues toprogress.

Other R&DPrograms.

In Q4, 2022 we announced our first ever programs toinvestigate DehydraTECH-CBD for possible use in the fields of dementia and in diabetes . Dosing in theseprograms is underway as of the time of this update and each areexpected to complete during Q1, 2023.

We chose to investigate the utility of DehydraTECH-CBDin each of these areas for a number of reasons. For instance, it haslong been known that hypertensive patients are at greater risk ofdeveloping diabetes, and that those people who have diabetes are twiceas likely to suffer from hypertension. This interconnectedrelationship between the two diseases begs for further investigationof DehydraTECH-CBD given our growing knowledge of DehydraTECH-CBD’sability to lower blood pressure.

Likewise, vascular dementia is known to be more commonin people who suffer from hypertension. Alzheimer’s disease is themost common type of dementia, followed by vascular dementia. Inaddition to our ongoing animal study investigating whether there isany impact on cognitive performance in animals dosed withDehydraTECH-CBD, we are also intrigued by the knowledge that certainstudies conducted by others are currently evaluating nicotine forpossible utility related to dementia which is obviously another areawhere Lexaria has demonstrated possible utility of its technology.

We are awaiting the results from each of these twostudies before determining our next steps with each. It is possible wemay consider additional investigations in 2023 related to either orboth of these areas of interest, and even possibly including somecombination of DehydraTECH-CBD with DehydraTECH-nicotine with regardsto our dementia investigations. Since each of these programs are atearlier stages than our other, leading program areas, additionalR&D will be required before we investigate commerciality.

R&DSummary.

We’ve been fortunate to have succeeded in most of our R&D pursuits during2022 . Our optimism at the start of2022 turned out to be well founded, and that optimism is, if anything,even stronger today. We’ve firmly established Lexaria as one of theworld’s leaders in the investigation of CBD for the purposes ofcontrolling human blood pressure; and, we’ve demonstrated in animalstudies that DehydraTECH-CBD is competitive with one of the world’sleading anti-seizure medications.

2023 will be full of additional R&D developments.

During Q1 we expect:

• additional results from hypertension studyHYPER-H21-4

• dosing completion in our animal dementia study

• dosing completion in our animal diabetes study

• dosing completion in human nicotine studyNIC-H21-1

• submissions and publishing of additional results inresearch journals

During the balance of 2023 we expect to both file ourIND application and receive FDA approval to commence the actual INDclinical study. That will be a major step in our maturation as apharmaceutical company and will be our primary research focus once itbegins. If it is successful it should contribute to an increase in ourcorporate value, and an increase in the likelihood of our reaching oneor more commercial agreements within the pharmaceutical industry. And,as is now well known, the primary reasons weconducted our earlier human hypertension studies was to demonstrateboth efficacy and safety – which we think has reduced the risk ofunexpected failure in our IND program.

Finally, in the area of oral nicotine and pendingsuccessful results of our ongoing human absorption study, we feel wehave come close to completing our scientific investigations and cannow market the technology to the global nicotine industry in pursuitof growing revenue streams. This will mark a transition fromscientific R&D to a commercial focus, which many of you have longawaited.

Incidentally, if our IND hypertension program is asuccess then it could potentially pave the way for more commercialpursuits of our DehydraTECH-CBD for therapeutic use: a real milestonefor us as a company to be able to interact with the pharmaceuticalindustry.

COMMERCIAL RESULTS ANDCOLLABORATION

As noted last year, “Lexaria’s business plan haslong been one of collaboration following reduction of risk.”

Our revenues shrank during both calendar and fiscal2022 (our fiscal year-end is August 31). But, beginning in the quarterending August 31, 2022 and continuing into the quarter ending November30, 2022 we have begun to see some improvements in our revenues. Theyare admittedly still small and I continue to stress that revenue isnot a current metric to build a valuation for Lexaria at thisstill-early stage of development.

That said, we signed new customers during 2022 thatwill only begin to have an impact on our revenues during 2023 andbeyond. Chief among these was Premier Wellness ScienceCo., Ltd . of Japan – our first clientin Asia. Premier is a subsidiary of a Tokyo Stock Exchange-listedcompany, Premier Anti-Aging Co., Ltd.

In order to retain ongoing exclusivity, the negotiatedminimum quarterly payments to Lexaria began September 1, 2022 and,during the first five years of the Agreement, amount to US$4,527,500.Minimum quarterly payments start at $16,750 in the fiscal quarterending November 30, 2022 but increase each year to reach $332,500 inthe quarter ending November 30, 2025 and beyond. Assuming this clientexecutes its business plan as expected, it will obviously generatesignificant revenue streams to Lexaria over time.

Lexaria is also in discussions with a number of largercompanies in Europe and North America regarding licensed use of ourDehydraTECH technology both for consumer sectors as well as – forthe first time ever - within the pharmaceutical industry. Thesediscussions are ongoing and would not have been possible were it notfor our successful R&D programs that continue to validate ourtechnology. It is impossible to predict the outcomes of businessdiscussions, nor their timing, but we hope to be able to announce oneor more significant new transactions in the first half of 2023.

Also, while it remains impossible and likely misleadingto try to predict in advance the size of any potential transaction, itis not incorrect to examine the underlying assumptions. As presentedlast year,

“For example, many national orinternational corporations do not participate in new business segmentsunless they can be assured of multi-billion revenue potential. For companies with sales of $10billion or $30 billion per year, this makes sense. And given thatLexaria’s business model is to out-license our technology inexchange for royalties, you can see very quickly how every singlepercentage point of royalty on each $1 billion in revenue, amounts to$10,000,000 per year in highly profitable revenue to Lexaria.  A 3%royalty rate on $4 billion would be $120,000,000 in revenue; or an 8%royalty on $2 billion would be $160,000,000 in revenue.

Furthermore, any out-licensingtransactions Lexaria achieves with pharmaceutical companies may alsobe accompanied by significant, potentially multi-million dollar stageddevelopment milestone fees payable to Lexaria: this is customary inpharmaceutical licensing deals.  These fees can at times be receivedyears before a product ever reaches the market, or even regardless ofwhether a product ever reaches the market. Lexaria expects licensingfees to significantly complement its royalty revenue generation andalso allow it to realize commercial revenue generation well in advanceof when revenues start to flow from royalties upon actual productsales under these licensing transactions.“

As 2023 begins, the Lexaria team is delighted to havebegun the transition towards a more commercial focus which we hopewill build the base of a successful and profitable future. Both ourunderlying R&D work as well as our commercial discussions willcontinue and we will report on developments as they occur.

INTELLECTUAL PROPERTY

During 2022, Lexaria was awarded five more new grantedpatents , bringing our total to 28granted worldwide.  Our latest new patent award was also our firstever granted in Canada. We currently have patents granted in thefollowing countries:

United States

Canada

Mexico

Australia

Japan

India

European Union (many individual countrieswithin)

While we expect additional patents to be awarded in2023, we have already achieved considerable intellectual propertyprotection through our existing patent portfolio. We also retain a large number of patent applications that continue toprogress through various patent offices around the world. We do notreceive a granted patent for each application we submit, and havebegun to encounter our own “prior art” as a barrier to some newapplications. This is, somewhat perversely, possibly “a goodthing” in that our existing intellectual property is robust enoughto potentially impede competing patent issuances importantly fromunknown third parties.

Lexaria’s intellectual property rests on a soundfoundation of granted patents around much of the world.

SUMMARY

Lexaria achieved most of its goals for 2022 and did sowhile adhering to tight budgets and fiscal controls in a world whereinflation is rampant. We’re very careful and stingy with ourshareholder’s money and we try to build value at every step; even ifthat sometimes means projects take more time to complete. Our largeststudy ever, HYPER-H21-4, was completed on schedule, and althoughprimary results have been released and were positive, secondaryresults have been slow to arrive and will continue to be released in2023.

We have several studies ongoing with dosing completionexpected in the first three months of 2023, and these could help shapesubsequent investigatory work. And of course, the biggest item to beaccomplished in 2023 will be our IND filing and approval forinitiation of the work program thereunder.

One of our biggest achievements of 2022 was our greateremphasis on commercial pursuits. The signing of our first businessclient in Japan was certainly one indication of that, but so too areongoing commercial discussions. Our scientific investigations intooral nicotine are nearing an end after several years of study and,assuming positive results from our human study as we experienced froman earlier animal study, we will be looking to commercialize thistechnology in 2023 with any of several interested parties.

We’ve continued on the path towards commercializationwith our lead program, our DehydraTECH-CBD for hypertension which weexpect to enter FDA IND-registered Phase 1(b) studies in 2023.  Andgiven the success experienced in our five previous human clinicalstudies examining DehydraTECH-CBD for pharmacokinetic performance andhypertension relief, we feel we have effectively de-risked thatupcoming program.

We continue to enjoy more successes than failures.We’re hopeful that our commercial endeavors might obviate any needto raise capital via equity issuance at current market levels, and our tight fiscal controls have greatlyassisted in that pursuit. We will be trying to enter one or morecommercial arrangements in 2023 that include our receipt ofsignificant cash payments. And, our past and current efforts atbuilding our client base for use of our tech related to consumerproducts will continue and intensify as we try to build incrementalcash flows.

I continue to thank our many supportive shareholders– you have expressed your belief in our goals and share our desirefor success. It hasn’t always been easy, but the best things in liferarely are. It is my goal for 2023 to make Lexaria Bioscience one ofthe top drug delivery performers in the biotech/pharmaceutical worldas we continue to prove the validity of our technology, and reallybegin our efforts to deliver financial rewards to you, our owners.Thank you for giving us this opportunity to work our way forward.

Chris Bunka

About Lexaria Bioscience Corp.

Lexaria Bioscience Corp.’s patented drug deliverytechnology, DehydraTECH™, improves the way active pharmaceuticalingredients (APIs) enter the bloodstream by promoting more effectiveoral delivery. Since 2016, DehydraTECH has repeatedly demonstrated theability to increase bio-absorption with cannabinoids, antiviral drugs,PDE5 inhibitors and more. DehydraTECH has also evidenced an ability todeliver some drugs more effectively across the blood brain barrier.Lexaria operates a licensed in-house research laboratory and holds arobust intellectual property portfolio with 28 patents granted andmany patents pending worldwide. For more information, please visit www.lexariabioscience.com .

CAUTION REGARDING FORWARD-LOOKINGSTATEMENTS

This press release includes forward-looking statements.Statements as such term is defined under applicable securities laws.These statements may be identified by words such as"anticipate," "if," "believe,""plan," "estimate," "expect,""intend," "may," "could,""should," "will," and other similar expressions.Such forward-looking statements in this press release include, but arenot limited to, statements by the company relating the Company’sability to carry out research initiatives, receive regulatoryapprovals or grants or experience positive effects or results from anyresearch or study. Such forward-looking statements are estimatesreflecting the Company's best judgment based upon current informationand involve a number of risks and uncertainties, and there can be noassurance that the Company will actually achieve the plans,intentions, or expectations disclosed in these forward-lookingstatements.  As such, you should not place undue reliance on theseforward-looking statements.  Factors which could cause actual resultsto differ materially from those estimated by the Company include, butare not limited to, government regulation and regulatory approvals,managing and maintaining growth, the effect of adverse publicity,litigation, competition, scientific discovery, the patent applicationand approval process, potential adverse effects arising from thetesting or use of products utilizing the DehydraTECH technology, theCompany’s ability to maintain existing collaborations and realizethe benefits thereof, delays or cancellations of planned R&D thatcould occur related to pandemics or for other reasons, and otherfactors which may be identified from time to time in the Company'spublic announcements and periodic filings with the US Securities andExchange Commission on EDGAR. The Company provides links tothird-party websites only as a courtesy to readers and disclaims anyresponsibility for the thoroughness, accuracy or timeliness ofinformation at third-party websites. There is no assurance that any ofLexaria’s postulated uses, benefits, or advantages for the patentedand patent-pending technology will in fact be realized in any manneror in any part. No statement herein has been evaluated by the Food andDrug Administration (FDA).  Lexaria-associated products are notintended to diagnose, treat, cure or prevent any disease. Any forward-looking statements contained in thisrelease speak only as of the date hereof, and the Company expresslydisclaims any obligation to update any forward-looking statements orlinks to third-party websites contained herein, whether as a result ofany new information, future events, changed circumstances orotherwise, except as otherwise required by law.

INVESTOR CONTACT:

George Jurcic - Head of InvestorRelations

ir@lexariabioscience.com

Phone: 250-765-6424, ext202

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