Hyasynth Biologicals Inc — Patent for efficient cannabinoid production

Hyasynth Biologicals Inc — Patent for efficient cannabinoid production

Private Canadian biotech firm Hyasynth recently announced a US patent award for using yeast to biosynthesize cannabinoids and is the first to sell yeast-derived cannabidiol (CBD) built on this proprietary pathway. The biosynthesis of major and rare cannabinoids provides multiple growth prospects in pharmaceutical and consumer markets. Key catalysts for further funding and expanding the valuation include growing commercial sales in 2022 and demonstrating production of cannabinoids in a large-scale, low-cost manner.

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Hyasynth Biologicals

Patent for efficient cannabinoid production

Biotechnology

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21 October 2021

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N/A

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Listing

Private

Total capital raised

~C$11.5m

Business description

Hyasynth Biologicals is a Montreal-based biotech firm that produces and distributes biobased cannabis products. Its biosynthesis platform produces ingredients through a yeast fermentation process, without the need for traditional cultivation from cannabis or hemp plants. Biosynthesis is a process using a genetically modified organism (eg yeast) to ultimately produce pure, high-value products such as cannabinoids.

Bull

Growing global adoption of biosynthetic cannabinoids.

Strong yeast fermentation patent and product portfolio.

Shortened manufacturing process unaffected by weather, soil and other climatic variations in growth cycle.

Bear

Limited visibility on financials and capital requirements given private company status.

Increasing competition from other biosynthetic companies.

Cannabinoid use for medical treatments still at an early stage.

Analyst

Ken Mestemacher

+44 (0)20 3077 5700

Private Canadian biotech firm Hyasynth recently announced a US patent award for using yeast to biosynthesize cannabinoids and is the first to sell yeast-derived cannabidiol (CBD) built on this proprietary pathway. The biosynthesis of major and rare cannabinoids provides multiple growth prospects in pharmaceutical and consumer markets. Key catalysts for further funding and expanding the valuation include growing commercial sales in 2022 and demonstrating production of cannabinoids in a large-scale, low-cost manner.

Using yeast to biosynthesize cannabinoids

Hyasynth produces CBD and a range of rare cannabinoids through yeast fermentation without the need for traditional cultivation from cannabis or hemp plants. The company recently announced a US patent on its cannabinoid biosynthesis pathway, which reduces the number of enzymatic yeast steps to produce CBD by 75%. Management believes this makes Hyasynth’s strain significantly more efficient and allows it to engineer new yeast strains rapidly and optimize them for large-scale production. Furthermore, this patent award follows Hyasynth’s 2020 achievement of the first ever sale of CBD produced and extracted from yeast. Importantly, using biosynthesis aids in the precision manufacturing of cannabinoids on a large scale with consistent quality and reliability.

Expanding pharma markets with significant potential

Cannabinoid markets are expanding, especially in the cosmetic and pharmaceutical markets. While still in its infancy, research on using cannabinoids to treat medical conditions is growing, with several candidates in clinical development. For instance, rare cannabinoids could potentially treat conditions such as Crohn’s disease, and companies such as GW Pharmaceuticals have developed treatments for epilepsy. Raymond James estimated that the global market for cannabinoid biosynthesis could reach C$10bn in 2025 and C$115bn by 2040. Biosynthetics have the potential to generate larger amounts of rare cannabinoids than those that occur in small quantities in the plant. To take advantage of these growing markets, Hyasynth’s proprietary strains can be scaled rapidly in production, reducing time to market and potentially enabling sales to begin within months.

Catalysts: Sales milestones and scaling production

As Hyasynth is a private company, financials are not available nor is the stock publicly traded, so appraising its valuation is difficult. Hyasynth expects to be profitable by the end of 2022. The cannabinoid biosynthesis market has received significant funding over the past few years, and a 2019 SynBioBeta report noted that more than 15 companies made multi-million-dollar investments in cannabinoid biosynthesis companies. Key catalysts for further funding and an expanding valuation include moving product to market by growing commercial sales in 2022 and Hyasynth demonstrating that it can scale production from a pilot to a larger commercial level, yet still in a cost-effective manner.

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Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

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United States of America

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NSW 2000, Australia

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