In this edition of "Rising High," The Fly conducted an exclusive interview with Dennis O’Neill, chief investment officer of Biomedican, a producer of pharmaceutical-grade compounds using natural biological synthesis. Here are some of the highlights:
BIOSYNTHESIS: Biomedican is a biotech startup focused on low-cost methods of growing high-value compounds with proprietary yeasts. The company currently has four patents pending and two products ready for large-scale production, cannabigerol/cannabigerolic acid and astaxanthin. “Biomedican is a biotech company that has developed a biosynthesis platform for targeting rare cannabinoids in high-value compounds and this process is 100% natural, it’s 100% organic, it’s non-GMO and it produces a bioidentical to the molecules found in nature,” O’Neill said. “What we end up with is a 99% pure pharmaceutical grade product, that has zero contaminants or toxins.” The company has 20 years of experience working with a specialized proprietary yeast for its process and has strategic partnerships with Denmark Technical University, Clemson University, Imperial College London, and the Institute of Genetics in Moscow. The CIO added the company produces almost unlimited amounts of the compounds as it uses continuous fermentation allowing Biomedican to harvest every day. “Most importantly is that we are 70%-90% less expensive than the current wholesale market and because we are biosynthesis, we use a very, very small facility compared to the grow operations,” he said. “We use less than 90% of the natural resources and energy than somebody that would be growing, harvesting, extracting and purifying the rare cannabinoids.” The company also uses 60%-70% less sugar, the largest ingredient when producing rare cannabinoids, O’Neill said. “What we’re able to do now with CBG/CBGA is that we have the largest yield of anybody in the industry,” he said. “We don’t know anybody that is doing over 1% yields and we’re currently at 5% dry mass yields, so that gives us a significant advantage… At the end of the day what we’re delivering to the market is a better pharmaceutical-grade product at significantly lower prices.”
CBG/CBGA: When asked about the company’s focus on CBG/CBGA, O’Neill said Biomedican did not want to target CBD due to the amount of players in the space, more supply than demand and collapsed prices. “We wanted to focus on CBG, CBN and THCV because they are known to treat a multitude of medical conditions significantly better than CBD,” he said. “The CBGA market now is about $20 a gram, CBN is around $40 and THCV is around $60 a gram.” He said the company is expected to be in large-scale production within nine months or so, and Biomedican will be able to produce almost any rare cannabinoid for less than $1 a gram. “It’s significantly less than everybody else and it’s going to be able to allow millions of people around the world to be able to afford to use a CBG or a CBN or a THCV,” the CIO said, noting, “When we produce CBG that is identical to the molecule in nature, it’s the exact same product every single time, it doesn’t change like the grow seasons from plant to plant and that enables us for large distribution.” Biomedican will look to distribute through companies that have large CBD distribution networks, O’Neill said, as a lot of CBD companies are interested in adding rare cannabinoids to their current lines. “This is a way for them to be able to differentiate themselves in the market and add not only value to their customers but see significant increases in revenue,” he said, stating Biomedican is seeing notable demand for CBG/CBGA. ”We’ve received multiple unsolicited inquiries into buying anywhere from $10M-$20M worth of CBG. The catch was that they wanted it as soon as possible. What we’re seeing out there is that because of the fires out West and hurricanes on the East Coast there has been a disruption to the supply chain.” Demand is initially coming from those in the CBD market, the CIO said, but the company is also starting to see a good amount of interest in adding these cannabinoids to nutraceuticals, health food, cosmetics and in products targeted for the pet care market. “There has been over 50 clinical trials on CBG, either past or currently going on, and there’s a lot of data that has shown that there’s benefits for CBG above and beyond just CBD,” he said. “As we’ve seen an explosion of demand for CBDs over the past four or five years, you’re going to see the next explosion of demand for these rare cannabinoids and specifically biosynthesized rare cannabinoids.”
ASTAXANTHIN: O’Neill said Biomedican also decided to develop astaxanthin, an antioxidant used for animal and human consumption, to show the true nature of the biosynthesis platform. “We can literally biosynthesize any compound or any molecule that has a significant market attached to it and especially if there’s a lot of chemically synthetic products within those markets,” he said. “We’ve biosynthesized astaxanthin and we ended up with a crystallized version of it, which is the purest form you can get. We’re able to produce it for about 90% less than what the current market is.” The CIO noted two of the largest global buyers for astaxanthin purchase anywhere from $200M-$300M a year strictly for animal feed and Biomedican is currently in testing with them. “We expect that once we finish with the testing for bioavailability and stability that we will be receiving orders of tens of millions of dollars from them,” he said.
CORONAVIRUS: The coronavirus pandemic has impacted many companies within the cannabis industry and O’Neill said Biomedican saw the biggest effect in raising funds. “We’re currently raising a round of capital to finish some R&D and to finish preparations to go into large-scale production,” he said, noting a lot of investors decided not to make new investments during the outbreak. “They’re starting to come back now so we think that our capital raise will be imminent. We hopefully will be funded by the end of the year.”
CHALLENGES: When asked about the biggest challenges facing the industry, the CIO said he sees a couple of hurdles including regulations, quality and sustainability. “On the growth side it’s going to be difficult as the regulations tighten up around anybody touching the plant or producing THC,” he said. “That could potentially provide some roadblocks for some of the companies that are in the market.” O’Neill said another challenge he sees is the quality of the products in the market. “You need to have a product that has all the attributes of a pharmaceutical product, which is the same product every single time, pharmaceutical-grade, zero toxins and zero contaminants,” he said. “It needs to be sustainable and it needs to be cheap enough for the majority of the masses.” Third-party testing based on industry standards will be helpful to address this issue, the CIO said, adding the next stage will be educating the market on rare cannabinoids and their health benefits. Global warming will also pose a challenge to the space, according to O’Neill. “All these grow operations are at risk, indoor or outdoor,” he said. “Between fire, hurricanes and other natural disasters, this could potentially really damage the supply chain and the large multi-billion-dollar companies that want to be in this space need to know that they have a secure supply chain. I think what we’re going to see is significant growth moving forward on biosynthesized organic rare cannabinoids.”
OPPORTUNITIES: As the cannabis space develops, O’Neill said the company sees opportunities in its new class of cannabinoid as well as distribution. “We have discovered a new class of cannabinoid,” he said. “We are the only company in the world that has figured out how to produce SESQUI-CBG. That’s a big opportunity for us because we will be creating that SESQUI-CBG, SESQUI-CBN and SESQUI-THCV.” The SESQUI-cannabinoids have the attributes of the regular cannabinoid as well as additional traits with further potential health benefits, the CIO said. “On the other side of that, we’re very, very excited about global distribution of our CBG/CBGA and some of these other rare cannabinoids through initially large CBD distribution networks,” he said, adding the company believes nutraceuticals will come next and be a huge market for Biomedican. O’Neill said the next step would be adding it into chocolates, protein bars and cereal. “One thing that’s nice about our compound is that you can add it into any edible,” he said. “It doesn’t need to be modified in any way, shape or form.”
CANNABIS STOCKS: Other publicly-traded companies in the space include Akerna (KERN), Aleafia (ALEAF), Aphria (APHA), Aurora Cannabis (ACB), Auxly Cannabis (CBWTF), Biome Grow (BIOIF), CannTrust (CTST), Canopy Growth (CGC), Canopy Rivers (CNPOF), CordovaCann (LVRLF), Cresco Labs (CRLBF), Cronos Group (CRON), CV Sciences (CVSI), CURE Pharmaceutical (CURR), Delta 9 (VRNDF), Emerald Health (EMHTF), FluroTech (FLURF), General Cannabis (CANN), Greenlane (GNLN), Green Thumb Industries (GTBIF), GrowGeneration (GRWG), Harborside (HBORF), HEXO (HEXO), Hemp Inc. (HEMP), India Globalization Capital (IGC), Indiva (NDVAF), Indus Holdings (INDXF), Innovative Industrial Properties (IIPR), Khiron Life Sciences (KHRNF), Liberty Health Sciences (LHSIF), MediPharm Labs (MEDIF), MedMen (MMNFF), Mjardin (MJARF), Neptune Wellness (NEPT), Omnicanna (ENDO), Organigram (OGI), Planet 13 (PLNHF), Sproutly (SRUTF), Stem Holdings (STMH), Sunniva (SNNVF), Supreme Cannabis (SPRWF), Valens (VLNCF), Tetra Bio-Pharma (TBPMF), Tilray (TLRY), Trulieve (TCNNF), Village Farms (VFF), Vireo Health (VREOF), Wayland Group (MRRCF), WeedMD (WDDMF), Wildflower Brands (WLDFF), YSS Corp. (YSSCF), Zynerba (ZYNE) and 4Front Ventures (FFNTF).