- Canadian biotechnology company that produces high purity, plant-derived compounds for the global pharmaceutical, health and wellness, and consumer packaged goods industries
- Developed a proprietary biosynthetic process to manufacture CBG in commercial quantities
- Strong global demand from prospective partners for CBG samples from all segments of consumer packaged goods industry
What Willow Biosciences does:
Referred to as the “mother of all cannabinoids” because it naturally evolves into other cannabinoids like THC and CBD, CBG is a non-psychoactive compound that could have antimicrobial and anti-oxidant functions in humans. But the cannabinoid occurs in very small concentrations in the plant, making it difficult to manufacture economically at high purity levels.
The Canadian company has developed a proprietary biosynthetic process to manufacture the cannabis compound in commercial quantities. Essentially, Willow transfers the genetic information of the plant into yeast, creating a miniature factory that increases cannabinoid production and allows for efficient large-scale manufacturing. The process results in higher purity product, at lower cost, with significantly less environmental impact.
With Raymond James putting the estimated present value of the biosynthetic market at C$40 billion, Willow is sitting comfortably in a growing market space. The firm is seeing strong global demand from prospective partners for CBG samples from all segments of consumer packaged goods industry, including nutraceuticals, food and beverage, personal care and over-the-counter medicine.
Led by a diverse team that co-founded five companies with successful exits, the group ended its fourth quarter with strong liquidity, including around C$46 million in cash.
All told, Willow is in a solid financial position to fund commercial production this year.
How is it doing:
Willow wrapped up its latest quarter with a cash balance of C$40.7 million to execute on its commercialization plans for its proprietary biosynthetic cannabinoid products.
The company said that it expects to be at full commercial production in 2022 of CBG.
During the quarter ended June 30, 2021, Willow inked its first multiyear commercial agreement with cosmetics firm Cellular Goods that will see Willow supplying its high-purity CBG for the firm’s cannabinoid-based skincare products.
Cellular Goods will use Willow’s ultra-pure cannabigerol in its premium cannabinoid-based skincare products that are slated to launch later in the year.
Throughout the remainder of 2021, the company told investors that it plans to continue to optimize its commercial process for CBG, which is now at manufacturing scale, and added that it hopes to build out a “robust order book” for 2022.
The firm is putting the pieces in place to support its commercialization efforts, boosting its commercial operations and R&D teams and ramping up its lead program, CBG, to start manufacturing.
Willow’s R&D teams are now focusing on developing cannabidiol (CBD) and tetrahydrocannabinol (THC) programs for commercial manufacture, and is looking at harvesting other rare cannabinoids such as cannabidivarin (CBDV), cannabigerovarin (CBGV), tetrahydrocannabivarin (THCV), and Cannabinol (CBN). As a result of these activities, Willow expanded its Vancouver and Mountain View, California teams to include manufacturing, quality and regulatory groups, along with additional R&D scientists that focus on strain optimization and process development.
Willow now has 55 employees, 42 of which are in technical roles.
Also, in a sign of investor confidence in the company, Willow was added to The Cannabis ETF (NYSE:THCX), an exchange-traded fund listed on the NYSE Arca, which tracks the Innovation Labs Cannabis Index, a portfolio of 33 stocks that are expected to benefit from the growth of the legal global marijuana, CBD and hemp industries.
- Customer sampling and sales for research and development in 2021
- Scale-up development and expansion into other cannabinoids
- Entry into the pharmaceutical sector anticipated in 2022
What the broker says:
ATB Capital Markets has a Speculative Buy rating on Willow’s shares and a 12-month price target of C$2.75.
“Considering Willow’s large potential addressable market and its steady progress towards commercialization in 2021, we believe the company is trading at an attractive valuation,” analyst David Kideckel wrote in July. "We view Willow to be a potential acquisition target for companies looking to develop cannabinoids through biosynthesis, given Willow’s scientific progress to date, its management’s expertise, and its strong intellectual property with multiple patent applications covering more than 200 novel genes to increase cannabinoid production.”
What the boss says:
Commenting on Willow’s milestone agreement with Cellular Goods, Trevor Peters, Willow's CEO, told investors that the company was “very excited” to announce its first commercial supply agreement for CBG.
“In just over two years, we have gone from proof of concept in the lab to commercial scale up and sales of our first cannabinoid, which will be slated for use in a consumer product,” Peters said. “Cellular Goods are at the forefront, developing premium consumer cannabinoid products in the UK and we are thrilled to be supplying them with our ultra-pure, biosynthetically made CBG."
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