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I’ve long been critical about the viability of biosynthetic production of cannabinoids in microorganisms. Organigram and Hyasynth Bio have been particularly adamant about the cost savings of biosynthesis over traditional cultivation. Let’s start by looking at what they’ve said:
“Cannabinoids that are produced this way are expected to provide huge benefits in cost, quality and sustainability versus traditional plant cultivation and extraction.”
“Hyasynth’s proprietary enzymes and yeast strains have to date allowed them to make CBG, CBD and other cannabinoids for novel and specialized products, including vapourizable cannabis products and cannabis-infused beverages, as well as pharmaceutical ingredients, for a fraction of the cost of traditional plant-based production.”
When companies are sending this message to shareholders and analysts, they rightly start to think that biosynthesis can outcompete the cannabis plant in terms of cost. Which leads them to ask questions like this from Organigram’s last conference call:
Thanks for that color. Very helpful. And my second question, I want to go back to Hyasynth for a second. And if I heard you correctly, Greg, you had mentioned CBDa is one of the precursor cannabinoids there. I’m just wondering, does this mean you’re going to start leveraging that cannabinoid first in some of your 2.0 products or is it CBD and whichever cannabinoid it is, I guess my overall question for on the issue of biologic — sorry, on biosynthesis is which 2.0 products do you think are most amenable right off the get-go for a biosynthetically derived cannabinoids. Thanks.”
Based on what Organigram and Hyasynth Bio have previously said about biosynthesis, you’d expect an answer outlining their plan to bring in biosynthetically produced cannabinoids to replace the ‘more expensive’ cannabinoids from the cannabis plant. This is what we received:
Yes, it’s a great question, David. I mean, so — really excited. Again, it’s important to note that Hyasynth, this was the first as far as we’re aware of and they’re aware of the first successful commercial sale production and sale of any cannabinoid produced through biosynthesis and they had a potential purchaser buyer that was interested in CBDa. So that was the product they ended up producing. Right now their focus in discussions with Hyasynth is they have 23 cannabinoids in their portfolio. 19 of those are minor cannabinoids, I think each uniquely positioned. And I think I’ve mentioned this on previous calls, where we’re really excited about in the future, I think there’s two paths for biosynthesis. One is producing a pure major cannabinoid for potential use in products and not only products that we would potentially produce, but possible partners that Hyasynth could partner with in other industries. But I think more importantly, the minor cannabinoids and certainly there’s a number of them that we are looking at that when — and I’ll give an example of THCV, for example, where THCV has similar effects to THC, but does not necessarily induce an appetite in the same manner at least from anecdotal reports. So I think there’s a lot of opportunities for some of these minor cannabinoids in the adult Rec market.”
Instead of answering the question, Greg decides to educate the analyst on the “opportunities of some of these minor cannabinoids”. The closest he gets to answering the question is mentioning the “potential use” of pure major cannabinoids in products. The most important question investors and analysts need to ask Organigram is how much does it cost you to produce a gram of CBD from yeast compared to a gram of CBD from plants. Organigram has all the information they need to answer that question. Given how adamant they were about the cost saving potential of biosynthesis, I’m surprised no one has asked them to quantify that statement.
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 Organigram.