A year after MedRelaf’s sale to Aurora, former MedReleaf CEO Neil Closner is launching a new cannabis project, this time focused on yeast rather than plants.
The new company LAVVAN Inc. is a partnership between Mr. Closner, several of his former MedReleaf associates and the U.S. biotech firm Amyris, which uses yeast fermentation to produce ingredients for health and beauty products. LAVVAN’s plan is to produce CBD and other cannabinoids using a similar yeast fermentation process to the one that Amyris uses for other ingredients.
As Amyris explains on their website: “Amyris has studied how the cannabis plant creates CBD and effectively reverse engineered the process by taking the same genes that ‘instruct’ the plant to make CBD and inserted them into a yeast. This then eats sugars in a big fermentation tank and produces CBD. (While the yeast is genetically engineered, there is no yeast in the final product.)”
LAVVAN, which has licensed Amyris’ fermentation technology, is just getting off the ground, and does not yet have production facilities. Nonetheless, Mr. Closner said that he hopes to begin selling biosynthesized CBD as early as 2020. Seven former MedReleaf scientists and executives have joined the project.
Cannabis Professional spoke to Mr. Closner about the project. The interview has been edited for clarity.
Cannabis Professional: You made your name with cannabis plants, so why shift focus to biosynthetics?
Neil Closner: Five or six years ago when we began, cannabis was really in its infancy as a commercial endeavour, and I spent the last five years sort of as a toddler learning how to walk. We now think biosynthetics is the next logical step or even necessary evolution in where the industry needs to go. We’re big believers in what is understood as the health and wellness benefits of cannabinoids, and we certainly believe there is much more to uncover there. If that is where the market is headed, then generating those materials by way of growing plants is a very inefficient method of gaining access to those materials.
CP: Is the idea that traditional pharmaceutical companies more likely to use cannabinoids if they’re produced in a lab environment?
NC: 100 per cent. There are all kinds of analogies I could use: at a basic level, you plant a single apple tree and every apple that comes off that tree, while they might be genetically very similar, none of them look the same, and some of them may be a little bit sweeter and some are a little bit softer. There’s a challenge from a consistency standpoint for major food and beverage and pharma companies, and consumer packaged goods companies. It takes a leap of faith to rely on plants that are so highly variable.
CP: Is there also an intellectual property angle to this? As in, are lab-grown cannabinoids easier to patent?
NC: There’s some validity to that. However, at the end of the day, the CBD we will produce will be genetically, or from a DNA standpoint, exactly the same as CBD coming from a plant. On the basic IP level, one CBD molecule coming from us versus coming from a plant will not be different, so the IP protection issues will remain. But how you then use that input and what you combine it with is where some IP protection might be possible.
CP: A number of other cannabis firms — Cronos and Organigram to name two — are also betting on biosynthetic cannabinoids. They’ve suggested that commercial scale production may be several years away. What are your thoughts on this?
NC: The real differentiator in this space is going to be the ability to scale; because you get those enormous economies of scale when you’re producing using fermentation at a huge scale, and no companies, certainly none that are upstarts in the cannabinoid space, have any experience at scaling-up from a yeast production standpoint. That’s why I was drawn to this opportunity of the partnership that we have with Amyris: they’ve been in this business for a very long time, and they’re recognized widely as a leader in this space, and they’ve got multiple molecules commercialized today on the market that are being produced at tremendously large scale. So we’re gaining the benefit of their expertise in that area, which I believe is what is going to enable us to be hitting the market very soon, and probably before anybody else, and at a scale that will allow for tremendous cost savings.
CP: Do you expect you’ll be able to produce cannabinoids in a lab setting at costs comparable to cannabinoids produced in plants?
NC: We will be substantially lower.
CP: Do you have cost metrics you are targeting?
NP: Not that I’m comfortable releasing at this point, but it will be substantially lower than what’s coming out now.
CP: Seven former MedReleaf colleagues have joined you to LAVVAN. How did that come about?
NP: Most of them left when I left, which is right when the deal closed, and a few more had left over the last while. There was no poaching. I had an amazing team at MedReleaf, and we all recognized how well we worked together and how complimentary all of our skills are. Going back almost a year ago, when the deal close with Aurora, they all very openly said to me, if we work in this space again, it’s with you and it’s together with us collectively.
CP: How is the relationship with Amyris structured?
NC: It’ a licensing agreement essentially. We licensed Amyris’ foundational intellectual property, which they use across industries, and they’re assisting us in the use of that IP to develop a solution for cannabinoids. The Amyris team has been working on it for a number months, and now my team is joining them to help get it done. They’re in the food and ingredients business, which is another reason we’re excited to work with them, because they’ve got some good relationships with a number of companies that we view as potential customers for us.