viewWillow Biosciences Inc.

Willow Biosciences poised to be the first company to commercially produce CBG, the "mother of all cannabinoids"


The Canadian company has developed a proprietary biosynthetic process to manufacture the cannabis compound in commercial quantities

Willow Biosciences Inc. -

Quick facts: Willow Biosciences Inc.

Price: 1.39 CAD

Market: TSX
Market Cap: $171.34 m
  • 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
  • Commercial production is expected in the first half of 2021

What Willow Biosciences does:

Willow Biosciences Inc (TSE:WLLW) (OTCQX:CANSF) is aiming to become the first company to biosynthetically produce a rare cannabinoid compound known as cannabigerol, or CBG.

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 second quarter with strong liquidity, including around $12.2 million in cash.

All told, Willow is in a solid financial position to fund commercial production in the first half of 2021.

How it is doing:

Willow kicked off a 500-litre production run in July to deliver samples of CBG in the third quarter of 2020.

In September, Willow announced it had successfully developed a scalable process for producing CBG with greater than 99% purity and no detectable THC with demonstrated production at 500-litre scale, making the pilot a success.

The program was run in collaboration with development partner Albany Molecular Research Inc (AMRI). Earlier, the seed train for inoculating the pilot fermenter began at AMRI’s facility with Willow’s proprietary yeast strain, a process that should take around one week.

Willow will also receive Canadian government funding and advisory services from the National Research Council of Canada’s Industrial Research Assistance Program to help it advance towards commercialization.

Inflection points:

  • Commercialization is expected in the first half of 2021
  • 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
  • Potential global CPG market for biosynthetically produced at an estimated $8 billion by 2025 and $27 billion by 2030, according to Raymond James

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 CEO says:

"Achieving scalable production of pure CBG is a pivotal milestone for both Willow and our industry," CEO Trevor Peters told investors recently.

"The market opportunity for high-purity cannabinoids manufactured under GMP control is expected to be in the billions of dollars in the coming years, and as the first company to successfully produce product samples, Willow is poised to capture a sizable portion of that market. We anticipate being able to begin commercialization of CBG in the first half of 2021 and are currently selecting manufacturing partners to assist us in reaching both local and worldwide markets."

Contact Angela at angela@proactiveinvestors.com

Follow her on Twitter @AHarmantas

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