Over the years I’ve spent a lot of time covering companies trying to produce cannabinoids in yeast as an alternative to plants. A couple of articles you should read before delving into this one are these ones I wrote covering identical granted patents (Biosynthesis Patent Wars) and the history of Willow Bioscience. With the recent announcement of a David Beckham backed cannabinoid company ‘Cellular Goods’ sourcing their cannabinoids through companies using fermentation, more connections between these companies and others have surfaced. 

Before we take a closer look at Cellular Goods, we’re going to look at a company called Lavvan. Several of the people on Cellular Goods’ advisory panel and management team are/were from Lavvan. Lavvan is interested in making and selling various goods containing cannabinoids, to do this, they hired Amyris to develop a system for producing cannabinoids in yeast. Amyris was founded in 2003 by Jay Keasling, the same professor I talk about in ‘Biosynthesis Patent Wars’. 

A year and a half after Lavvan enters into the research agreement with Amyris, they file a lawsuit against them. I highly recommend you read the lawsuit if you have the time, there are twists and turns to the plot that keep you on your toes to the end. The main issues presented by Lavvan include Amyris misrepresenting their advancements and breaching rights to commercialize cannabinoids produced in yeast. One section reads:

“…seeking a quote from him for a draft press release touting that Amyris had ‘demonstrated a process to deliver the highest purity and quality CBD at the lowest cost it has seen reported.’ This being the first that Closner had heard of this supposed success, and with no data or documentation to support the claim, Closner did not support the press release. After congratulating Amyris on the achievement, Closner explained that Lavvan was not ‘comfortable having this news come out at this point and in this way,’ but mentioned the Parties could discuss Amyris’s progress ‘in more detail at next week’s meeting’ and also ‘discuss[] the public communication around it.’ Even one year later, Amyris still has not provided any data that could support such a claim.”

What did Lavvan think about the cost?:

“Moreover, after Lavvan plugged the costs provided by its manufacturer, the Selected Manufacturer, into the limited data Amyris provided, Lavvan realized that the costs far exceeded the cost per kilogram that Amyris needed to hit under the milestone.”

Another interesting quote from the lawsuit outlines an unnamed partner that’s redacted from the document:

“Just days before signing the RCL Agreement, however, Amyris told Lavvan that Amyris realized it had to limit the field in which Lavvan could commercialize cannabinoids because it had a longstanding, existing collaboration with [redacted]”

The collaboration mentioned here could be with Denetrix; not only was it also founded by Jay Keasling, the CEO and President are former VPs at Amyris and their headquarters are located right next to each other. There is no formal documentation around this partnership or Amyris being involved with any company in the cannabis industry apart from Lavvan.

As of writing, Amyris has filed 0 patents relating specifically to the production of cannabinoids in yeast. They own several patents for the production of common precursors to cannabinoids and other molecules. It’s impossible to know how they’ve managed to finish the cannabinoids biosynthetic pathway without infringing on existing intellectual property if they provide no framework of protections on their own system. Typically when you develop something so specific that you believe has value, you patent it to protect others from using the same system. Amyris owns many patents specific to the production of other molecules in yeast, presumably they understand the importance of patents in this field.

A month after Lavvan filed the lawsuit against Amyris, Alexia Blake left Lavvan and joined Cellular Goods under the same role as Head of Product Development. Two other Lavvan management, Etan Bendheim and Istok Nahtigal, join Cellular Goods as advisors. Cellular Goods’ plan presented to the public is to source synthetic or biosynthetically produced cannabinoids to create products for the market, similar to Lavvan’s plan. If you dig into the prospectus you get a more complicated story.

Cellular Goods plans on sourcing cannabinoids from Willow Biosciences, Demetrix, Lygos and Purisys. Purisys is the only company listed I have not discussed, they have a patented process for producing cannabinoids through chemical synthesis (synthetic production). Of the 4 suppliers, Purisys is the only one with a published process that doesn’t infringe on any existing intellectual property. 

Why did Cellular Goods choose synthetic and biosynthetic suppliers of cannabinoids over cannabinoids from plants? The answer is buried in the prospectus:

“As synthetic CBD does not require the growth of Hemp or Cannabis to produce CBD, it does not require the Company to hold and maintain a licence from the Home Office or other regulatory or governmental body. It is created in a ‘pure’ form, and therefore does not require additional processing to isolate the CBD or to remove impurities.”

Their choice in sourcing cannabinoids is solely based on current regulations, they don’t need a licence to sell synthetic/biosynthetic CBD. What about in the future?:

“Should the Company or its suppliers be unable to secure a licence to grow Hemp, or to secure renewal of their licences, this could have a material adverse effect on the Company’s business, financial condition, results of operations and/or prospects”

Essentially, the current methods their suppliers are using to produce cannabinoids are temporary to circumvent regulations until they can get a licence to cultivate hemp. A far cry from the benefits of synthesis or biosynthesis touted by companies using these methodologies. This is what the relationship between the companies mentioned looks like when mapped out:

The preceding is the opinion of the author, and is in no way intended to be a recommendation to buy or sell any security or derivative. The author holds no position in any company mentioned.