Scientific advancements can be found throughout the booming cannabis industry, but this technology hits companies right at the source.

Editor’s Note: Earlier this week, Bruce Linton announced that he would be stepping down as CEO of Canopy Growth Corp., saying, “The board decided today, and I agreed, my turn is over.” We’ll have more on this development next week, so stay tuned.

You don’t have to look far to find science hard at work in the cannabis industry.

There are companies on the bleeding edge of technology mapping genomes.

Others are testing growing conditions with exceedingly high precision and sophisticated equipment.

And a few are building databases with information on millions of patients and billions of data points on cannabis use and results to dial in the precise dosage needed to treat a variety of ailments.

But of all the research going into better ways of bringing cannabinoids to market, nothing will have a more disruptive impact than developing different ways to manufacture those cannabinoids in the first place.

Where your cannabis will come from will depend a lot on what you want from it. Demand for the various cannabis-infused products will determine who wins the race to supply the market.

Traditional products like flower for smoking or brands that emphasize the benefits of whole-plant extracts will continue to source supplies from those growers cultivating marijuana or hemp in greenhouses and fields.

But the vast majority of products need purity, and the cheapest way to get it avoids the plant entirely.

In just a moment, I’m going to share four companies who are doing just that…

Building Off the Human Genome Project

Pulling the cannabinoids from cannabis plants is not a clean process. The compounds that extractors are after are found in the waxy, hair-like trichomes entwined with the flower.

And no matter how sophisticated the process, the resulting concentrates still retain the flavor and smells of cannabis.

To further process the resulting extracts into pure crystalline isolate powder containing a single cannabinoid adds to the cost, with bulk isolates like cannabidiol (CBD), costing around $10 per gram.

And that’s just for primary cannabinoids like tetrahydrocannabinol (THC) and CBD. Other beneficial cannabinoids, like cannabigerol (CBG) or cannabinol (CBN), are only found in trace amounts, and producing isolates for these rare cannabinoids is economically impossible.

But there is a much cheaper way to get concentrated cannabinoids.

And that involves recruiting tiny microbes to make them for you.

The process is called biosynthesis and it is pulling in a lot of research and development dollars from investors and also in the form of grants from the government.

Biosynthesis is a result of work that got underway with the Human Genome Project back in the ’90s.

Geneticists learned how to alter the genes of simple microbes like yeast, bacteria, mold, lichens, and fungus to get them to create all sorts of things.

The technology has come a long way and, over the past 10 or so years, scientists have got them to yield a number of products including biofuels, medicine, and even fibers for clothes.

And they do this by feeding off simple inputs like sugar, starches, or fats.

To produce cannabinoids, researchers snip a section of the gene in cannabis cells responsible for making a particular cannabinoid and splice it into the genes of a yeast cell or E. coli. Once the upgrade is done, these organisms now can take sugar or another nutrient, metabolize it, and excrete the targeted cannabinoid.

So once you have the microbe doing what you need it to do, under the right conditions, they multiply in a vat. Get a large enough vat, and you have billions of microbes churning out pure cannabinoids in high quantities at less than $1 per gram.

The costs are so low because biosynthesis avoids the cost of land, equipment, greenhouses, fertilizer, etc. It’s far less energy intensive, and the cannabinoid isolate produced is purer than plant extracts.

And the scientists leading the research see not only the potential of delivering cheap and pharmaceutically pure cannabinoids for medicines and infused products such as beverages, but also the possibility of creating large quantities of lesser cannabinoids that would otherwise be impossible to get to market.

Biosynthesis will soon be the lowest cost way to manufacture cannabinoids, and these companies know it.

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Four Ways to Play Biosynthesis

Aurora Cannabis Inc. (NYSE: ACB), Cronos Group Inc. (Nasdaq: CRON), and Organigram Holdings Inc. (Nasdaq: OGI) have all put their money into biosynthesis research and development (R&D) in a flurry of deals at the end of summer last year.

Last August, when Aurora acquired Anandia Laboratories, it acquired the company’s research into cannabinoid biosynthesis that had been underway for a few years.

The following month, Cronos entered into a partnership with Ginkgo Bioworks, agreeing to fund up to $22 million of the biotech firm’s R&D.

And Organigram’s parent company invested $10 million into Hyasynth Biologicals.

You can find out more about all of these Canadian producers by reading our analyst reports, which you can access through our NICILytics Database.

It contains reports and ratings on over 160 publicly traded cannabis companies, the best of which you can find in the portfolios of members of our Cannabis Investor’s Report.

You can also find this small play on cannabinoid biosynthesis.

Vancouver, British Columbia-based InMed Pharmaceuticals (TSX: IN, OTC: IMLFF) was founded in 2014 and focuses its efforts on generating revenue through three business lines.

One is biosynthesizing cannabinoids with genetically engineered E. coli bacterium.

It also has a bioinformatics platform that allows it to develop new drugs through computer simulations, which is quicker and cheaper than traditional drug discovery methods.

Finally, it develops cannabinoid-based drugs, with three drugs in preclinical development.

The NICI analyst report on InMed is just one of many extensive company reports found in what we call the “Vault,” and each one includes a NICI rating of the company. To learn more about how we rate cannabis companies, take a look at this free primer.

And as you dig into the database, you’ll find plenty of interesting cannabis companies at the intersection of cannabis and science.

Greg Miller

Executive Director, National Institute for Cannabis Investors

P.S. Our experts predict the CBD market alone could grow more than 15 times faster than the cannabis industry as a whole in the coming year. With CBD companies seeing upwards of 1,000% gains in a matter of weeks, there’s no better time than now to get your foot in the door. That’s why our experts have done the research for you and identified two CBD companies that are in the best position to potentially deliver stellar profits. To find out more information, just click here now.


Comments

6 responses to “Biosynthesis Finds Its Way into These Leading Cannabis Stocks”

  1. no genetically modified synthetic poison please just natural plant-based healing the way doctors recommend what is best for health

  2. Hey Greg every last one of these companies are in my portfolio and have been there for quite some time. I had these long before NICI came into existence. I am glad to see you concur with my assessment and I hope we both turn out to be right!!!!

  3. Another option on the Biosynthesis route is Cardiol. CRDL on the TSX. It is known for its use of CBD created via Chemical Synthesis but it also has a very intriguing free option on Biosynthesis through its rights to acquire CBD from Noramco.

    Noramco is the world’s largest producer of high quality synthetic cannabinoid active pharmaceutical ingredients for the pharmaceutical and healthcare industry. It recently announced a JV with Willow Bioscience to jointly develop a yeast based biosynthesis platform for the production and distribution of CBD.

    Through a preexisting partnership with Noramco Cardiol has the rights to acquire the CBD for sale to its clients. Essentially giving them the best of both worlds. The benefit of proven Chemical Synthesis CBD to produce the world’s purest Pharmaceutical CBD for immediate markets starting H2 2019 and the free option to integrate Biosynthetic CBD in future if development succeeds.

    Pharmaceutical CBD for medical purposes is the future…no one is talking about the groves of willow trees they have…instead we go to a corner store and by aspirin…the same aspirin in Tokyo, Toronto or Toledo!, all made by chemical synthesis.

    In interests of full disclosure I am a director of Cardiol so of course a believer. But its one of the investment points I believe gets missed.

  4. I would like to hear more about the above company. Does NICI Lytics have any more insight into this company…. Cardiol…. Thank you for your info Terry.

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