From Silky_Johnson on Stockhouse:
Altria, Cronos, Lexaria?!
I’ve been a shareholder of both Cronos & Lexaria for a couple of years now...Cronos has been doing fantastically since the partnership with Altria whereas Lexaria’s marquis deal has not been accurately recognized by the market...
1) While the R&D commitment of Altria seems to be a nominal amount, the deal seems to suggest that Altria will be responsible for the commercializations of the products that Lexaria has helped formulate. This would require an FDA submission and will likely cost over $100 million dollars before the first product is sold.
For an Altria commitment of that magnitude (on top of the $12 million to Lexaria in the terms of the offer) they will not have a majority stake in Lexaria Nicotine until/if they buy the subsidiary.
Conclusion...we have a non-dilutive financing of a product suite that will likely generate billions of dollars in revenue a couple years down the road. This is what the market is missing...
Another thing...I scrolled through the 8-k today of the contract between Altria & Lexaria. See below for some rather revealing details that no one is picking up on...
1.3 “Ancillary Product” means an Unlicensed Product that contains a cannabinoid or other bioactive material derived from Cannabisas the Other Active.
6.2 (f) Licensor understands and acknowledges that the Licensee’s participation in the development of Improvements, by funding or otherwise, including pursuant to work conducted under the Warrant and Option Agreement, is subject to certain obligations of Licensee regarding the research, development, marketing or other commercialization of cannabinoid-containing products and materials, pursuant to an agreement between Licensee or its Affiliates with a Third Party (the “Third Party Partner”) as of the Effective Date, insofar as such Improvements relate to Ancillary Products.
6.2(f) parts (i) and (ii) with respect to Lexaria's ability to apply any business improvements beyond nicotine pursuant to Altria’s right of first negotiation to apply same to its Third Party Partner.
Third party partner...Cronos?!?! Everything is is in the writing and I think we will likely see Cronos and Lexaria partner together for edible (potential beverage) formulations.
Regardless, it seems as if Altria is keen on using Lexy for more than just Nicotine!
Cronos may also go after Hill Street who is of course licensing DehydraTECH
Either way, I think Lexy is the best ancillary play out there and if I’m right, it is an absolute steal at these prices.
