Lexaria Bioscience Corp.

Previous wording

In this quarterly report, unless otherwise specified, all dollar amounts are expressed in US dollars. All references to “common shares” and “shares” refer to the common shares in our capital stock, unless otherwise indicated. The terms “Lexaria” “we”, “us”, “our” and “Company” mean the Company and/or our subsidiaries, unless otherwise indicated.

Current wording

In this quarterly report, unless otherwise specified, all dollar amounts are expressed in US$. All references to “common shares” and “shares” refer to the common shares in our capital stock, unless otherwise indicated. The terms “Lexaria” “we”, “us”, “our” and “Company” mean the Company and/or our subsidiaries, unless otherwise indicated.

Previous wording

Lexaria is advancing several R&D activities in preclinical as well as on-going and planned future clinical programs. During the six months ended February 28, 2025, Lexaria announced results from its 12 week, 12 study-arm, GLP-1 Diabetes Animal Study (WEIGHT-A24-1) which was completed using diabetic, pre-conditioned Zucker rats. An arm relates to a subset of participants or test subjects assigned to receive a specific treatment (for example, a formulation of DehydraTECH and semaglutide). Each arm is compared to others to evaluate the effectiveness, safety, and outcomes of the treatments being tested. Each group of the Study was dosed for a 12-week period following the initial acclimation period. During the Study, over 1,500 blood plasma samples were collected from the total starting rat population of 72 animals for purposes of detailed PK drug delivery analyses. Results showed that DehydraTECH-enhanced liraglutide and certain CBD formulations outperformed the Rybelsus® formulations with respect to lowering blood sugar and having greater body weight-control.

Current wording

Lexaria is advancing several R&D activities in preclinical as well as on-going and planned future clinical programs. During the nine months ended May 31, 2025, Lexaria announced results from its 12 week, 12 study-arm, GLP-1 Diabetes Animal Study (WEIGHT-A24-1) which was completed using diabetic, pre-conditioned Zucker rats. An arm relates to a subset of participants or test subjects assigned to receive a specific treatment (for example, a formulation of DehydraTECH and semaglutide). Each arm was compared to others to evaluate the effectiveness, safety, and outcomes of the treatments being tested. Each group of the Study was dosed for a 12-week period following the initial acclimation period. During the Study, over 1,500 blood plasma samples were collected from the total starting rat population of 72 animals for purposes of detailed PK drug delivery analyses. Results showed that DehydraTECH-enhanced liraglutide and certain CBD formulations outperformed the Rybelsus® formulations with respect to lowering blood sugar and having greater body weight-control.

Previous wording

Blood and brain tissue PK is also in the process of being analysed to help determine whether DehydraTECH processing resulted in higher blood and brain absorption than non-DehydraTECH groups, as Lexaria has evidenced numerous times in previous animal studies. The Study also included a comprehensive battery of liver and kidney function testing and blood chemistry analyses that remain to be analysed and reported.

Current wording

Blood and brain tissue PK is also in the process of being analyzed to help determine whether DehydraTECH processing resulted in higher blood and brain absorption than non-DehydraTECH groups, as Lexaria has evidenced numerous times in previous animal studies. The Study also included a comprehensive battery of liver and kidney function testing and blood chemistry analyses that remain to be analyzed and reported.

Previous wording

Further, during the six months ended February 28, 2025, Lexaria completed the dosing in nine (9) healthy human volunteers to investigate DehydraTECH-enhanced tirzepatide, a dual action glucagon-like peptide-1 + glucose-dependent insulinotropic peptide receptor agonist, as compared to the Zepbound® brand of injected tirzepatide. Results indicated that DehydraTECH-tirzepatide, as compared to Zepbound®, evidenced a 47% reduction in adverse events, a comparable overall reduction in blood glucose and a comparable increase in insulin levels.

Current wording

Further, during the nine months ending May 31, 2025, Lexaria completed the dosing in nine (9) healthy human volunteers to investigate DehydraTECH-enhanced tirzepatide, a dual action glucagon-like peptide-1 + glucose-dependent insulinotropic peptide receptor agonist, as compared to the Zepbound® brand of injected tirzepatide. Results indicated that DehydraTECH-tirzepatide, as compared to Zepbound®, evidenced a 47% reduction in adverse events, a comparable overall reduction in blood glucose and a comparable increase in insulin levels. In addition, the DehydraTECH-tirzepatide blood levels increased steadily and more consistently each day of the study, avoiding the abrupt peaks or declines seen with Zepbound® injections. Of note was the fact that on the final day of the study, 50% of the participants dosed with DehydraTECH-tirzepatide experienced their peak levels, indicating that their levels were still rising.

Previous wording

During the quarter ended February 28, 2025, Lexaria via its wholly owned subsidiary, Lexaria (AU) Pty Ltd, entered into a Project Agreement with Novotech (Australia) Pty Limited for the conduct of its Australian clinical study of DehydraTECH Cannabidiol and glucagon-like peptide 1 agonists alone or in combination, in overweight or obese, pre- and Type II Diabetes participants (GLP-1-H24-4) and began the associated site initiation visits and initial dosing of patients. It was also determined during the quarter to add a 5 th study arm to GLP-1-H24-4 to investigate DehydraTECH formulated tirzepatide.

Current wording

Also during the nine months ending May 31, 2025, Lexaria via its wholly owned subsidiary, Lexaria (AU) Pty Ltd, received Ethics Board Approval pursuant to a Project Agreement with Novotech (Australia) Pty Limited for the conduct of its Australian Phase 1b 12-week chronic clinical study of DehydraTECH formulated cannabidiol and semaglutide (separately and in combination) and tirzepatide in overweight or obese, or pre- and Type II diabetic participants (GLP-1-H24-4). As announced April 3, 2025, participant enrolment for all five arms of study GLP-1-H24-4 had been completed entering a total of 24 subjects per arm, with the full results from the study expected to be reported during the fourth quarter of calendar-2025.

Previous wording

Also, during the six months ended February 28, 2025, the Company entered into an Executive Management Contract to re-engage John Docherty as its President and to engage him as the Company’s Chief Science Officer and created a Scientific Advisory Board led by Mr. Docherty and comprised of:

Current wording

Also, during the nine months ended May 31, 2025, the Company entered into an Executive Management Contract to re-engage John Docherty as its President and to engage him as the Company’s Chief Science Officer, and created a Scientific Advisory Board led by Mr. Docherty and comprised of:

Previous wording

During the quarter ended February 28, 2025, Lexaria completed its study which fluorescently tagged DehydraTECH-semaglutide and a non-DehydraTECH-processed Rybelsus® mimicking comparator formulation ingested by Sprague-Dawley rats to track semaglutide distribution and localization with additional information being provided by key tissue samples. Analytical testing and interpretation is in progress and will be reported upon when concluded.

Current wording

During the quarter ended May 31, 2025, Lexaria completed its study which fluorescently tagged DehydraTECH-semaglutide and a non-DehydraTECH-processed Rybelsus® mimicking comparator formulation ingested by Sprague-Dawley rats to track semaglutide distribution and localization with additional information being provided by key tissue samples. Analytical testing and interpretation are in progress and will be reported upon when concluded.

Previous wording

Lexaria is also actively studying the chemical and microbiological purity and stability of select DehydraTECH compositions that it has prepared for the above animal and human studies over an extended duration of 6-12 months. Along with improved tolerability, PK and efficacy performance, long term stability is crucial if oral variants of GLP-1 / GIP drugs are to be seriously considered as replacements for currently injectable versions of these drugs.

Current wording

Lexaria is also actively studying the chemical and microbiological purity and stability of select DehydraTECH compositions that it has prepared for the above animal and human studies over an extended duration of 6-12 months. Along with improved tolerability, PK and efficacy performance, long term stability is crucial if oral variants of GLP-1 / GIP drugs are to be seriously considered as replacements for currently injectable versions of these drugs. Stability findings thus far are positive and meeting internal expectations.

Previous wording

A critical accounting estimate is an accounting estimate for which a) the nature of the estimate is material due to the related level of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change, and b) the impact of the estimate on the Company’s financial position or operating performance is material. We did not identify any such estimates in our Annual Report on Form 10-K for the year ended August 31, 2024 and none have been identified for the six months ended February 28, 2025.

Current wording

A critical accounting estimate is an accounting estimate for which a) the nature of the estimate is material due to the related level of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change, and b) the impact of the estimate on the Company’s financial position or operating performance is material. We did not identify any such estimates in our Annual Report on Form 10-K for the year ended August 31, 2024 and none have been identified for the nine months ended May 31, 2025.

Previous wording

Through February 28, 2025, we have funded our operations primarily through the proceeds from the sale of common stock. The Company has consistently incurred recurring losses and negative cash flows from operations, including net losses of $5,423,600 and $1,837,771 for the six months ended February 28, 2025, and February 29, 2024, respectively.

Current wording

Through May 31, 2025, we have funded our operations primarily through the proceeds from the sale of common stock. The Company has consistently incurred recurring losses and negative cash flows from operations, including net losses of $9,214,206 and $3,622,083 for the nine months ended May 31, 2025, and May 31, 2024, respectively.

Previous wording

During the six months ended February 28, 2025, we raised $4.4 million in net proceeds from the sale of securities pursuant to our Registered Direct offering which closed in October, 2024 and our At the Market (ATM) offerings.

Current wording

During the nine months ended May 31, 2025, we raised $6.0 million in net proceeds from the sale of securities pursuant to our Registered Direct offerings which closed in April, 2025 and October, 2024 and our At the Market (ATM) offerings.

Previous wording

The continuation of Lexaria as a going concern depends on raising additional capital and/or attaining and maintaining profitable operations. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern within one year following the date that these consolidated financial statements on Form 10-Q are filed and do not include any adjustment relating to the recovery and classification of recorded asset amounts or the amount and classification of liabilities that might be necessary should our Company discontinue operations. Management believes that given the Company’s current cash position, recurring losses from operations and net capital deficiency, there is substantial doubt as to the Company’s ability to continue as a going concern within one year following the date that these consolidated financial statements are issued. The Company expects that its current cash resources will be sufficient to fund the Company’s operations through the fourth quarter of calendar year 2025.

Current wording

The continuation of Lexaria as a going concern depends on raising additional capital and/or attaining and maintaining profitable operations. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern within one year following the date that these consolidated financial statements on Form 10-Q are filed and do not include any adjustment relating to the recovery and classification of recorded asset amounts or the amount and classification of liabilities that might be necessary should our Company discontinue operations. The Company expects that its current cash resources will be sufficient to fund the Company’s operations through the third quarter of fiscal year 2026. However, management has also concluded that given the Company’s current cash position, recurring losses from operations and net capital deficiency, there is substantial doubt as to the Company’s ability to continue as a going concern within one year following the date that these consolidated financial statements are issued.

Previous wording

Our net loss for the six months ended for the respective items are summarized as follows:

Current wording

Our net loss for the nine months ended for the respective items are summarized as follows:

Previous wording

Fees from intellectual property licensing and B2B sales totaled $357,923 and $296,278, respectively, for the six-month periods ended February 28, 2025 and February 29, 2024. For the six months ended February 28, 2025, relative to the six months ended February 29, 2024, license fees and B2B sales increased by $58,010 and $4,535, respectively, while R&D sales decreased by $900 year-over year, reflecting an increase in minimum fees earned within our licensee contract and a continuing shift in emphasis away from pursuit of B2B clients as we move toward pharmaceuticals.

Current wording

Fees from intellectual property licensing and B2B sales totalled $531,923 and $380,278, respectively, for the nine-month periods ended May 31, 2025 and May 31, 2024. For the nine months ended May 31, 2025, relative to the nine months ended May 31, 2024, license fees and B2B sales increased by $148,010 and $4,535, respectively, reflecting an increase in minimum fees earned within our licensee contract and a continuing shift in emphasis away from pursuit of B2B clients as we move toward pharmaceuticals. Other revenue decreased by $900 for the nine-month period ended May 31, 2025 relative to the nine months ended May 31, 2024.

Previous wording

Expenditures on R&D increased by $2,818,866 year-over-year for the six-month period ended February 28, 2025, due primarily to the completion of the manufacturing of Investigational Drug Product and start-up activities related to our Phase 1b Clinical Trial (GLP-1-H24-4), combined with progression of our other GLP-1 studies. Lexaria continues with applied development and programs in our pharmaceutical division with our primary focus being on optimization of DehydraTECH formulations of GLP-1 drugs, as well as advancing our DehydraTECH-CBD drug to treat hypertension.

Current wording

Expenditures on R&D increased by $4,963,278 year-over-year for the nine-month period ended May 31, 2025, due primarily to the completion of the manufacturing of Investigational Drug Product and the conduct of our Phase 1b Clinical Trial (GLP-1-H24-4), combined with the completion and analyses of our other GLP-1 studies. Lexaria continues with applied development and programs in our pharmaceutical division with our primary focus being on optimization of DehydraTECH formulations of GLP-1 drugs, as well as advancing our DehydraTECH-CBD drug to treat hypertension.

Previous wording

In the six months ended February 28, 2025, consulting fees and salaries increased by $572,909 year-over-year primarily due to the transition of the Company’s former CEO to the newly created role of Strategic Executive Consultant, the award of restricted stock, the engagement of a new CEO, with significant experience in development stage pharmaceutical company management, and a new CFO.

Current wording

In the nine months ended May 31, 2025, consulting fees and salaries increased by $919,976 year-over-year primarily due to the transition of the Company’s former CEO to the newly created role of Strategic Executive Consultant, the awards of stock options and restricted stock, the engagement of a new CEO with significant experience in development stage pharmaceutical company management, and of a new CFO.

Previous wording

Our legal and professional fees increased by $25,154 during the six months ended February 28, 2025 as compared to the same prior year period due to incremental accounting and professional fees incurred during the period and associated with increased registration statement filings and the utilization of legal advisory services.

Current wording

Our legal and professional fees decreased by $169,174 during the nine months ended May 31, 2025 as compared to the same prior year period due to lower accounting and professional fees associated with registration statement filings, financing activities and the utilization of legal advisory services.

Previous wording

Our other general and administrative expenses increased in total by $281,390 during the six-month period ended February 28, 2025, as compared to the same prior year period. The increase is attributable to advertising and promotion expenses, which increased by $138,222 as we continued an advertising campaign to bring the results of the Company’s R&D programs to the attention of various industry sectors and to the scientific and investment communities. We also recognized foreign currency transaction losses of $89,598 related to Canadian Dollar-denominated cash balances held by our US-based bioscience subsidiary.

Current wording

Our other general and administrative expenses increased in total by $81,741 during the nine-month period ended May 31, 2025, as compared to the same prior year period. The increase is attributable to foreign currency transaction losses of $103,582 related to Canadian Dollar-denominated cash balances held by our US-based bioscience subsidiary and realized foreign exchange losses incurred by our Australian subsidiary, combined with higher insurance premiums and partially offset by lower advertising and promotion expenses and impairment losses.

Previous wording

Net cash used in operating activities was approximately $4.2 million for the six months ended February 28, 2025, compared with $1.8 million during the same prior year period. The increase is attributable to an increase of $3.6 million in our net loss, which was partially offset by an increase of $0.2 million in non-cash expenses and a decrease in net working capital of $1.0 million, as we continued with the studies of DehydraTECH-powered GLP-1/GIP drugs listed above, including completion of manufacturing and delivery of investigational product to our Australian distributor for labelling, packaging, and distribution in connection with Study GLP-1-H24-4.

Current wording

Net cash used in operating activities was approximately $7.8 million for the nine months ended May 31, 2025, compared with $3.1 million during the same prior year period. The increase is attributable to an increase of $5.6 million in our net loss, which was partially offset by an increase of $0.3 million in non-cash expenses and a decrease in net working capital of $0.6 million, as we continued with the studies of DehydraTECH-powered GLP-1/GIP drugs, including completion of manufacturing and delivery of investigational product to our Australian distributor for labelling, packaging, and distribution in connection with Study GLP-1-H24-4.

Previous wording

Net cash used in investing activities was $65,698 for the six months ended February 28, 2025, compared to $97,016 for the same prior year period. The decrease relates primarily to lower spending on the prosecution of intellectual property, partially offset by purchases of laboratory equipment.

Current wording

Net cash used in investing activities was $85,141 for the nine months ended May 31, 2025, compared to $119,018 for the same prior year period. The decrease relates primarily to lower spending on the prosecution of intellectual property, partially offset by purchases of laboratory equipment.

Previous wording

Net cash from financing activities was approximately $4.4 million for the six months ended February 28, 2025, compared to approximately $5.3 million for the same prior year period. The decrease relates to lower net proceeds from the exercise of warrants, which was partially offset by higher proceeds from the sale of common shares.

Current wording

Net cash from financing activities was approximately $6.0 million for the nine months ended May 31, 2025, compared to approximately $10.3 million for the same prior year period. The decrease relates to lower net proceeds from the sale of common shares and the lack of warrants being exercised.

Previous wording

Since inception, the Company has incurred significant operating and net losses. Net losses attributable to shareholders were $5.4 million and $1.8 million for the six months ended February 28, 2025, and February 29, 2024, respectively. As of February 28, 2025, we had an accumulated deficit of $57.0 million. We expect to continue to incur significant operational expenses and net losses in the upcoming 12 months. Our net losses may fluctuate significantly from quarter to quarter and year to year, depending on the stage and complexity of our R&D studies and corporate expenditures, additional revenues received from the licensing of our technology, if any, and the receipt of payments under any current or future collaborations into which we may enter. The recurring losses and negative net cash flows raise substantial doubt as to the Company’s ability to continue as a going concern.

Current wording

Since inception, the Company has incurred significant operating and net losses. Net losses attributable to shareholders were $9.2 million and $3.6 million for the nine months ended May 31, 2025, and May 31, 2024, respectively. As of May 31, 2025, we had an accumulated deficit of $60.8 million. We expect to continue to incur significant operational expenses and net losses in the upcoming 12 months. Our net losses may fluctuate significantly from quarter to quarter and year to year, depending on the stage and complexity of our R&D studies and corporate expenditures, additional revenues received from the licensing of our technology, if any, and the receipt of payments under any current or future collaborations into which we may enter. The recurring losses and negative net cash flows raise substantial doubt as to the Company’s ability to continue as a going concern.

Previous wording

During the six months ended February 28, 2025, the Company has completed the following:

Current wording

During the nine months ended May 31, 2025, the Company has completed the following:

Previous wording

The accompanying unaudited consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the ordinary course of business. As of February 28, 2025, the Company had cash and cash equivalents of approximately $6.5 million to settle $1.8 million in current liabilities. We have performed a review of our cash flow forecast and have concluded that our existing cash, combined with inflows expected from executed license agreements, will not be sufficient to meet the Company's financial obligations for the twelve-month period following the filing of these consolidated financial statements on Form 10-Q. Accordingly, there is substantial doubt as to our ability to continue as a going concern for at least one year following the date of the financial statements included in this Quarterly Report. We intend to fund operations, working capital and other cash requirements for the twelve-month period subsequent to February 28, 2025 through equity financing arrangements and potentially from collaborations or strategic partnerships.

Current wording

The accompanying unaudited consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the ordinary course of business. As of May 31, 2025, the Company had cash and cash equivalents of approximately $4.6 million to settle $1.5 million in current liabilities. We have performed a review of our cash flow forecast, and given our current development plans and cash management efforts, we anticipate that our cash resources will be sufficient to fund operations through the third quarter of fiscal year 2026. However, we have also concluded that our existing cash, combined with inflows expected from executed license agreements, will not be sufficient to meet the Company's financial obligations for the twelve-month period following the issuance of these consolidated financial statements. Accordingly, there is substantial doubt as to our ability to continue as a going concern for at least one year following the date of the financial statements included in this Quarterly Report. We intend to fund operations, working capital and other cash requirements for the twelve-month period subsequent to May 31, 2025 through equity financing arrangements and potentially from collaborations or strategic partnerships.