Canadian biotech company Lexaria Bioscience has announced positive findings from a study that could potentially allow Denmark’s Novo Nordisk to reduce production costs for its type 2 diabetes and obesity drugs. The study revealed that Lexaria DehydraTECH-processed semaglutide is just as effective as the semaglutide that serves as the active ingredient in Novo Nordisk’s Ozempic injection pens and Rybelsus tablets, for which the Danish company paid about $1.8 billion back in 2020. Following this news, Lexaria stock rose more than 6% in after-hours trading on Monday. Over the last year, the share price has now tripled.
Details
Lexaria, in collaboration with the National Research Council of Canada, compared the molecular properties of semaglutide processed with its DehydraTECH technology to the commercially available semaglutide co-formulated with salcaprozate sodium (SNAC), which Nordisk uses in its Rybelsus tablets for the treatment of type 2 diabetes and obesity.
The researchers simulated gastric fluid to mimic conditions in the human gut. They then tested the compound using several methods and found that DehydraTECH-processed semaglutide was efficiently released in the simulated gastric fluid environment, with the semaglutide in both formulations most likely in monomeric form. Until now, it was believed that this simpler and smaller form in the human gut was only possible by combining semaglutide with SNAC.
“Lexaria’s DehydraTECH technology appears to achieve the desired monomeric form without the presence of SNAC,” the company stated. Novo Nordisk paid a total of $1.8 billion in 2020 to acquire the SNAC technology that is now utilized within Rybelsus tablets.
Market reaction
Lexaria stock rose on this announcement. It was up 6% in pre-market trading on Monday, August 19. At one point later in the day, the gains had grown to 11%, to $3.53 per share, though Lexaria ended the day flat at $3.18 per share. In after-hours trading, it advanced again, adding 6.6%. Over the last 12 months, the stock is up 200%.
About Lexaria
Lexaria developed DehydraTECH, which essentially helps existing drugs to be better and more rapidly absorbed into the bloodstream and brain tissues. The company mixes the active ingredients with certain fatty acids and then processes them.
In May, Lexaria signed a contract for a new study: it plans to test DehydraTECH-processed tirzepatide (the active ingredient in Eli Lilly’s best-selling Zepbound, used to treat type 2 diabetes and obesity) and potentially change the drug’s form from the original injection to a tablet, making it easier for consumers to take.
Analyst insights
According to MarketWatch, two analysts cover Lexaria. They recommend buying the stock, with an average target price of $10.00 per share, indicating nearly 215% upside to current levels.
