Why Altria’s New Partner Could Be a Game Changer

Altria Group Inc. (NYSE: MO | MO Price Prediction) is entering a new partnership with Lexaria Nicotine to fund the research and development of Lexaria’s patented DehydraTECH technology. The partnership will explore innovation in oral, reduced-risk nicotine consumer products and potentially commercialize DehydraTECH for oral nicotine delivery.

Lexaria’s DehydraTECH enhances the performance of beneficial compounds in ingestible products across four categories: taste and smell, speed of action, bio-absorption and bioavailability.

In exchange for a minority equity interest Altria Ventures, an indirect Altria Group subsidiary, will fund up to $12 million for Lexaria Nicotine to conduct milestone-based clinical investigations utilizing DehydraTECH.

Under the terms of the deal, Altria will pay Lexaria Nicotine a royalty on revenue generated from the sale of nicotine products containing DehydraTECH, and it holds the option to acquire 100% ownership in Lexaria Nicotine, at which time royalty payments would stop.

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Additionally, Altria has the right to initially appoint one of the seven directors on Lexaria Nicotine’s board of directors and, through further phased investments, may have the right to appoint up to three of the seven directors.

Chris Bunka, CEO of Lexaria Bioscience, commented:

This is an incredible milestone for Lexaria Bioscience and our shareholders. We are proud that Altria has chosen to invest in our DehydraTECH technology and look forward to reaping the benefits of working with a world-class partner. Together we have the opportunity to change nicotine delivery and make a difference in the lives of millions of consumers.

Shares of Altria were last seen down almost 1% at $46.84, in a 52-week range of $46.49 to $71.86. The consensus analyst price target is $57.95.

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