2021 has been a year of notable accomplishments for Willow Biosciences (WLLW). In March, it completed its first commercial-scale production of cannabigerol (CBG). In September, it announced the development of a process for producing high yield cannabigerolic acid (CBGA); both CBG and CBGA are believed to provide health and wellness benefits. WLLW’s processes have the potential to deliver rare cannabinoids at high yields and could give it access to the sizeable cosmetic, consumer and pharmaceutical industries. To expand its valuation, WLLW must continue towards monetising its intellectual property (IP) and further demonstrate that its products can be efficiently scaled to commercial quantities.
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Willow Biosciences |
Notable progress towards commercialisation
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Biotechnology |
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26 October 2021 |
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2021 has been a year of notable accomplishments for Willow Biosciences (WLLW). In March, it completed its first commercial-scale production of cannabigerol (CBG). In September, it announced the development of a process for producing high yield cannabigerolic acid (CBGA); both CBG and CBGA are believed to provide health and wellness benefits. WLLW’s processes have the potential to deliver rare cannabinoids at high yields and could give it access to the sizeable cosmetic, consumer and pharmaceutical industries. To expand its valuation, WLLW must continue towards monetising its intellectual property (IP) and further demonstrate that its products can be efficiently scaled to commercial quantities.
Producing valued rare cannabinoids at high yields
In March 2021, WLLW completed its first commercial-scale production of CBG for marketing in conjunction with its European manufacturing partner for use as samples for potential customers and also for Cellular Goods as a part of their June 2021 supply agreement. CBG is challenging to produce in sufficient quantities from plants, but WLLW’s advantage is that it was able to biosynthesise tens of kilograms of ultra-pure CBG for customer assessment and product development. In September, it announced the development of a biosynthetic process for producing ultrapure CBGA, a precursor of CBG. Studies have indicated that CBGA and CBG may have anti-oxidant, anti-inflammatory and anti-microbial properties. WLLW believes these CBG and CBGA products could provide access to an estimated US$380bn global cosmetics market (Allied Market Research).
Development agreements and partnerships
WLLW’s focus is on engineering yeast to biosynthesise specific cannabinoids and developing the related fermentation and downstream processes. Notably, WLLW has established development agreements and partnerships with firms such as AMRI (now Curia), as biosynthesis offers an efficient solution for producing high-value rare cannabinoids at greater yields versus plant cultivation and is an enabling technology for organisations that need consistent, highly pure cannabinoids.
Monetisation and scaling production key to valuation
WLLW’s shares are down 54% ytd. Developing a valuation is difficult as WLLW has generated little revenue to date (just C$122k in H121). It reported an H121 free cash flow burn rate of c C$9.7m and further cash burn could require further equity financing, though WLLW had C$40.7m gross cash as of 30 June 2021. For WLLW to expand its valuation, it must continue to monetise its IP portfolio, further scale its manufacturing to commercial quantities, begin to generate sustainable revenues from rare cannabinoids and continue to develop strategic partnerships.
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Financial results
Source: Willow, Bloomberg |
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Research: Investment Companies
BlackRock Latin American Investment Trust (BRLA) has two experienced managers, Sam Vecht and Ed Kuczma. They comment that Latin America is attractively valued both versus its history and compared with other regions. Within emerging markets, due to regulatory pressures there has been some rotation away from Asian technology companies whose shares have been favoured by investors over the last five to 10 years and have crowded out Latin American equities in emerging market indices. Vecht and Kuczma say that Latin America is benefiting from strong raw material prices and a robust economic recovery following the rollout of COVID-19 vaccines. Due to political risk, the managers have flattened the country risk within BRLA’s portfolio, and are focused on seeking high-quality, reasonably priced companies that have above-average earnings growth.