Cannabis 3.0? A new wave of cannabis compounds with proven antioxidant properties are coming that hold the potential to shake up multibillion-dollar industries.
Most investors don’t know the first thing about the cannabis compound known as cannabigerol, CBG. Unlike CBD, the non-psychoactive component of the plant’s antimicrobial properties that makes CBG is ideal for use in pharmaceuticals, consumer packaged goods and the food industries.
The problem is that CBG naturally occurs in incredibly small concentrations, making it challenging economically to manufacture the compound at high purity levels – a major frustration for companies that are eager to tap into the estimated $40 billion market.
READ THE DEEP DIVE: Willow Biosciences poised to be the first company to commercially produce CBG, the "mother of all cannabinoids"
Canadian company Willow Biosciences Inc (TSE:WLLW) (OTCQX:CANSF), however, has devised a process to produce high purity, low cost, CBG. Its biosynthetic process uses yeast to engineer cannabinoid molecules at scale. If all goes according to plan, the firm could be the first to commercially produce CBG as early as 2021.
A number of factors are driving the current interest of large consumer packaged goods companies that want to play in the space for personal care or wellness, Willow’s CEO Trevor Peters told Proactive. CBG has many similar properties to CBD, but CBD is a pharmaceutical drug in the US and the FDA is reluctant to approve it as a product to use in food and beverage or nutraceuticals.
Peters is confident that CBG won’t face the same approval hurdles. “We’ve demonstrated to the market through our pilots and guidelines towards commercializing in 2021 that this is going to be readily available to purchase,” the CEO said. “Because of what we are demonstrating, companies can start to think about how they want to use CBG in a matter of months, not years.”
Essentially, yeast biosynthesis involves taking baker’s yeast and engineering it to produce a molecule of interest, according to Peters.
“With CBG, we started with a yeast cell and engineered the strain up to a point where we brought in a partner and went from a one-litre to a 20-litre environment. We are now producing samples of CBG from a 500-litre pilot. We’re essentially engineering the cell to be fed hexanoic acid as a feedstock. For five days it ferments in a giant vat and the yeast propagates and ferments, producing the cannabinoid of interest that we’ve instructed it to produce.”
The entire process can take around 10 days, which is only a fraction of the time it would take for the plant to produce CBG in much smaller quantities. And it works best at scale, keeping costs low and producing large amounts of the product.
Peters estimates that the production cost will be under $2000 or even $1000 per kilogram once production scales up. But the CEO cautioned that it isn’t an “apples to apples” comparison with CBD.
“When we’re talking about a minor cannabinoid like CBG, the pricing profile is much higher because it’s harder to get, but there’s also a lot more wiggle room in that you can’t really get it in the plant,” Peters said. “Our market opportunity is being first to market with size and scale and the purity profile that our process offers.”
Each strain they produce will only contain the molecule of interest, which is why Willow is able to produce a minor cannabinoid at the same cost that would be for them to produce CBD or THC. It also gives Willow room to biosynthetically produce other cannabinoids to provide flexibility in the face of demand.
Pathway to commercial CBG
Willow has partnered with contract manufacturer Albany Molecular Research Inc to begin the process of scaling up production to commercial volumes. A recent 500-litre pilot program was successful at producing CBG with greater than 99% purity and no detectable THC.
The company is currently fielding samples to potential customers in the consumer packaged goods sector. It also closed a C$11.5 million offering that was increased due to demand to help fund its commercialization efforts.
Given the increased attention on CBG, Willow is not the only company devoting its energy towards commercialization. Canadian cannabis giant Cronos Group is working with Ginkgo Bioworks to create cannabinoids from yeast and says it will be able to make fermented cannabinoids at scale by next September. Others claim to be close behind.
First to market
Peters is still confident that Willow, as a pure-play biosynthesis company, will be first to market.
“There are three things a company absolutely must have in order to commercialize cannabinoids through biosynthesis: the appropriate amount of funding, a strong development partner and a good team. We’ve got all three in place," he said.
The group is now focused on transitioning from research and development into actual sales ahead of targeted production in the first half of 2021.
“The success that we’ve had with our pilot program and derisking our process has led a lot of companies to us that are interested in buying our products,” Peters told Proactive. “That’s given us a lot of credibility to be able to deliver on that promise over the coming months.”
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