Good morning everyone. As promised in Wednesday afternoon's newsletter, today we've got a new trading idea from the cannabis space for you... sort of. While this company's biotechnology lends itself to maximizing the inherent health benefits of hemp, the science could have a sweeping impact on the nutraceutical, supplement and even drug industries as well. The company is Lexaria Bioscience Corp. (LXRP), and as of yesterday, the bullish argument got a whole lot better. We'll look at the news and the company in detail in a moment. The first thing we want to do is set the stage for you, just so you have a perfectly clear idea of where this story is going. When you ask most people what important historical event happened in 1849, most of them will correctly answer the California Gold Rush. That is to say, once word got out that the western part of the United States was littered with gold, a whole slew of people made their way west to seek out their fortune. What's largely unrecognized about the Gold Rush of 1849 is that most of those rushers didn't find fortune. Oh, there was gold. There just wasn't enough of it to go around to make it worth everyone's while. Ironically enough, some of the folks who made the most money during the gold rush weren't miners and prospectors, but rather, the people who sold pickaxes and shovels to those hopeful prospectors. We see something similar playing out here in the midst of the Cannabis Rush of 2016. That is to say, a lot of companies are fighting one another in an effort to grab market share, whether their market is recreational marijuana or cannabinoid-based drugs. While everyone is asking how to make and sell more marketable products, nobody's really asking how to make existing products more effective. That is, nobody except Lexaria Bioscience. In simplest terms, Lexaria Bioscience is focused on improving the bioavailability of the healthy stuff found in food, supplements, vitamins, and yes, even in cannabis and hemp. You may not know it, but the bulk of the vitamins, anti-oxidants, minerals, amino acids and all the other desirable components of the pills you take and foods you eat don't actually get absorbed into your body. Sometimes as much as 96% of the ingredient in question isn't extracted, and instead passes right through. Not only is it a waste of time and money, it's a bit of a hassle to swallow a big capsule -- or several capsules -- for little to no benefit. Lexaria Bioscience changes this. In short, Lexaria has developed (and patented - more on that below) a proprietary technology that makes valuable molecules taste better and absorb better in the digestive tract. This platform could be applied to a variety of nutritional and health-oriented favorites, but Lexaria is starting with hemp as it's the most underserved market and arguably the biggest growth opportunity. The game-changer is the fact that Lexaria Bioscience is able to combine cannabinoids with lipids -- or fatty acids -- at the molecular level. It matters, because the human endocannabinoid system is itself lipid based, making this format the easiest and most effective means of introducing the medicinal and health benefits of hemp and hemp oil. Just so there's no confusion, hemp and marijuana are not the same thing. Hemp doesn't have any tetrahydrocannabinol (or THC) in it, which is the key driver of its psychoactive response. Hemp, and hemp oil to be exact, does have cannabidiol in it though, and for those of you who have been following the saga of medical marijuana and cannabis, you'll know cannabidiol can provide a lot of various medical benefits like the reduction of nausea, control of seizures, anti-cancer activity, anti-inflammation effects, and more. Yeah, well, as was said, Lexaria Bioscience can make it so more cannabidiol is absorbed by a consumer simply eating foods infused with hemp oil. Two different studies have been done to support the claim. The first study -- a third party review and in-vitro assessment of cannabidiol (CBD) bioabsorption done late last year -- indicated up to a 499% improvement in absorption compared to what was currently achievable. The second study performed earlier this year was a human clinical trial of nitric oxide induction. This study demonstrated potent CBD bioabsorption in humans using a nitricoxide salivary biomarker test. All subjects demonstrated rapid, significant and sustained increase in salivary nitric oxide levels (a 500%-1000% increase) following product ingestion, verifying the company's ViPova(tm) brand of teas, coffee and hot chocolate as well as its Lexaria Energy Foods Protein Bars could provide a superior hemp-usage experience. It's also faster-acting than alternative forms of CBD delivery. At stake is the fastest-growing part of a cannabis market that should be worth $6.6 billion by 2020... edibles, which grew 53% in the past year. Some say edibles could make up half of the cannabis market before it's all said and done. Here's the thing... it's not just hemp oil the infusion process works with, and it's not just on baked goods. Lexaria has beverages, gum, meats and more on its radar, and the company's got pending patents on processes that will make everything from vitamins to nicotine to ibuprofen more absorbable. One of those patents isn't pending any longer, however. On Wednesday, the U.S. Patent Office issued patent no. 9,474,725, for "Cannabinoid Infused Food and Beverage Compositions and Methods of Use Thereof." The official start date for patent protection is June 10th, when Lexaria first submitted the request. The USPTO's official publish date is today, October 27th, which means you'll be able to explore the patent and see what it's all about. Our guess is, the other patents and business ideas the company has in the works will be pretty comparable. With the first patent in hand though, Lexaria can really start to turn up the heat. That said, what must be appreciated about LXRP -- or LXX for our friends in Canada -- is that the company already has revenue lined up. See, it's been establishing partnerships since May of this year to provide its hemp-oil-infused food platform to distributors/retailers and edibles suppliers. Some of the details on some of these deals weren't disclosed. On others, they were, and the opportunity for several million dollars in annual royalty revenue is already on the table. (Royalty revenue is easy, high-margin revenue.) And that's before Lexaria could turn up the heat with the confidence of patent protection. In the meantime, Lexaria Bioscience will continue to sell its own protein and energy bars and exotic teas as well as its own hemp oil. That's all just the near-term hemp opportunity though. LXRP is also a long-game stock in that it's got a chance to tap into the $250 billion vitamin market and the $100 billion painkiller market. It's even got a pending answer for the nicotine-cessation market, which will soon be worth $16 billion. Bottom line? Lexaria Bioscience may be the market's best-kept secret right now, but that's apt to change, and soon. It's got a multi-pronged business model, selling its own edibles as well as licensing its hemp oil biotechnology. Partners are already getting on board. In the meantime, it's waiting on several other patents which will allow it to improve the bioavailability of the nutritional and medicinal components of all sorts of health-oriented consumer products. There's nothing not to like. You may not want to tarry if you want in though. LXRP is starting to really take flight, boosted by yesterday's announcement. Oh, and if you're in Canada, the ticker is LXX. Here's the press release, but for more information, check out the company's investor page. Lexaria Bioscience Announces Issuance of U.S. Patent for Cannabinoid Infused Edibles KELOWNA, BC / ACCESSWIRE / October 26, 2016 / Lexaria Bioscience Corp. (LXRP) (CSE:LXX) (the "Company" or "Lexaria") is pleased to announce the U.S. Patent and Trademark Office ("USPTO") has issued U.S. Patent No. 9,474,725, Cannabinoid Infused Food and Beverage Compositions and Methods of Use Thereof, pertaining to Lexaria's method of improving bioavailability and taste of certain cannabinoid lipophilic active agents in food products. This is Lexaria's first patent granted or awarded by the USPTO, and protects the Company's intellectual property related to infusion of cannabinoid compounds in edible products, which is the primary focus of the Company's business. This patent has been issued following the Notice of Allowance the Company received from the USPTO announced on July 12, 2016, and includes a set of claims that describe the Company's method of combining a fatty acid compound with any non-psychoactive cannabinoid for improved bioavailability and taste performance in both food and beverage formats. This patent issuance has a priority date of June 10, 2014, a publish date of October 27, 2016, and protects the Company's technology for twenty years. This issued patent is only the first in a series of applications by the Company: Lexaria also has two continuation applications filed with the USPTO under this issued patent which seek allowance of the Company's remaining patent claims originally filed thereunder that are still under pursuit. These claims pertain to additional active agents such as psychoactive cannabinoids (e.g., Tetrahydrocannabinol or THC), fat soluble vitamins, non-steroidal anti-inflammatory drugs (NSAIDs) and nicotine. "We are extremely pleased to have received our first patent protecting our proprietary technology," said Chris Bunka, CEO of Lexaria. "I expect our intellectual property portfolio to continue to expand." "The rapid issuance of this patent is a significant advancement for our Company," added John Docherty, President of Lexaria. "It increases our confidence in obtaining issuance of further claim sets under our remaining patents-pending, now that we understand the requirements for successful patent issuance. It strengthens our ability to negotiate our pending and future technology out-licensing agreements, now that our intellectual property is clearly staked." Lexaria has seven other patent applications pending in the U.S. and internationally and believes it is well positioned for allowance of these additional patent claim sets. The Company has significantly expanded its scientific database proving its technology since the original applications were filed, and is preparing to submit this information to patent examiners. Current patent-pending applications expand the breadth and variety of dosage formats and carrier molecules the Company's technology can empower. The Company is in the process of filing specific international patent applications within the next 60 days. As previously announced Lexaria has already completed two definitive agreements and has also entered two Letters of Intent for out-licensing of the Company's technology. This patent issuance strengthens the Company's positioning in these deals, and accelerates the potential for additional future technology out-licensing deals. About Lexaria Lexaria Bioscience Corp. is a food biosciences company with a proprietary technology for improved delivery of bioactive compounds. The Company's lipophilic enhancement technology has been shown to enhance the bioavailability of orally ingested cannabinoids, while also masking taste. This technology promotes healthy ingestion methods, lower overall dosing and higher effectiveness in active molecule delivery. The Company's technology is patent-protected for cannabidiol (CBD) and all other non-psychoactive cannabinoids, and patent-pending for Tetrahydrocannabinol (THC), other psychoactive cannabinoids, non-steroidal anti-inflammatory drugs (NSAIDs), nicotine and other molecules. www.lexariabioscience.com FOR FURTHER INFORMATION PLEASE CONTACT: Lexaria Bioscience Corp. Chris Bunka Chairman & CEO (250) 765-6424 FORWARD-LOOKING STATEMENTS This release includes forward-looking statements. Statements which are not historical facts are forward-looking statements. The Company makes forward-looking public statements concerning its expected future financial position, results of operations, cash flows, financing plans, business strategy, products and services, competitive positions, growth opportunities, plans and objectives of management for future operations, including statements that include words such as "anticipate," "if," "believe," "plan," "estimate," "expect," "intend," "may," "could," "should," "will," and other similar expressions are forward-looking statements, including but not limited to: any revenue or license fee payments that may be realized from license agreements, the introduction of any product lines that are derived from license agreements, that license arrangements may be entered into with other companies or partners, that the Company's technology enables higher rates of absorption of certain molecules such as vitamins and cannabinoids while simultaneously masking and at times even eliminating inherent strong flavors and/or odors typical of those molecules, or that the technology will function in a similar manner if tested with THC, nicotine, or any of the other molecules named in our patent applications. Such forward-looking statements are estimates reflecting the Company's best judgment based upon current information and involve a number of risks and uncertainties, and there can be no assurance that other factors will not affect the accuracy of such forward-looking statements. Access to capital, or lack thereof, is a major risk and there is no assurance that the Company will be able to raise required working capital. Factors which could cause actual results to differ materially from those estimated by the Company include, but are not limited to, government regulation, managing and maintaining growth, the effect of adverse publicity, litigation, competition, the patent application and approval process and other factors which may be identified from time to time in the Company's public announcements and filings. There is no assurance that any license agreement, hemp oil sector, or alternative health businesses will provide any benefit to Lexaria, or that the Company will experience any growth through participation in these sectors or as a result of the granted patent. There is no assurance that existing capital is sufficient for the Company's needs or that it will be able to raise additional capital. There is no assurance that Lexaria will successfully complete any other contemplated or existing technology license agreements, nor that Lexaria's technology will deliver any improvement in taste or bioavailability with any reliability nor across any product category. There is no assurance that any planned corporate activity, business venture, or initiative will be pursued, or if pursued, will be successful. There is no assurance that any hemp oil or cannabinoid-based product will promote, assist, or maintain any beneficial human health conditions whatsoever, nor that any patent application in the USA or any other nation or under any treaty will result in the award of an actual patent; nor that an award of any actual patent will protect against challenges from unknown third parties. There is no assurance that any new definitive agreement will be reached to license the Company's technology to any third party in return for compensation. There is no assurance that any of Lexaria's postulated uses, benefits, or advantages for the patented and patent-pending technology will in fact be realized in any manner or in any part. No statement herein has been evaluated by the Food and Drug Administration (FDA). Lexaria Energy Foods and ViPovaTM products are not intended to diagnose, treat, cure or prevent any disease. The CSE has not reviewed and does not accept responsibility for the adequacy or accuracy of this release. SOURCE: Lexaria Bioscience Corp