Organigram Holdings Inc (CVE:OGI) (OTCMKTS:OGRMF) (FRA:0OG) CEO Greg Engel discusses their strategic investment in Hyasynth Biologicals, Inc. Hyasynth have developed patent-pending technologies to engineer the precursor of cannabinoids from yeast which are ultimately converted into CBG, CBD, and THC compounds, identical to those found in the cannabis plant. Organigram believes the technology has massive potential to catalyze the marketplace by allowing the production of identical phytocannabinoids on a large scale at a low cost. The applications could be huge as companies move into producing more derivative-based cannabis products such as edibles and beverages.

TRANSCRIPT:

James West: Hey, welcome back to Midas Letter Live. We’re coming to you from the Exchange Tower in the financial centre of the universe in Canada in downtown Toronto, and my guest this segment is Greg Engels, CEO of Organigram, trading on the TSX Venture under the symbol OGI. Greg, welcome back.

Greg Engel: Thanks for having me.

James West: Greg, I would like to talk to you today about your recent announcement about a strategic investment in Hyasynth Biologicals. Let’s start off with how much money did you give them, how much do you owe them?

Greg Engel: Yeah, so, the full details of our equity ownership have not been released yet.

James West: Oh, okay.

Greg Engel: They’ll be released on closing, but we are committed to putting $10 million into them. So they’re an early-stage biotech company, but they’ve got a proven technology, and the proven technology is taking yeast, doing an alteration of the yeast to, you know, splice a gene in to produce olivetolic acid, which is the precursor for cannabinoids, and then they use enzymes to convert that into CBG, CBD and THC. This has incredible potential to really change the marketplace in terms of, you know, producing at a low cost, on a large scale, on a reproducible basis, a phytocannabinoid that, you know, is identical to that that the plants produce.

James West: No kidding? This is some weird science.

Greg Engel: It’s very exciting.

James West: How does it work?

Greg Engel: Well, so basically what you’re doing – I mean, you think of fermentation – we all understand fermentation for beverage alcohol, right? So instead of, you know, taking these yeasts and inserting the gene that will produce the various precursor molecules – olivetolic acid, as I outlined. And then, using proprietary enzymes to convert that into, within the pathway of phytocannabinoids into CBG and then into CBD and THC. And where the value is, as such, is that this can be an API, or an active pharmaceutical ingredient, for pharmaceutical products, because you’re getting a pure product out of this. Or you could mix it, for the adult recreational market, with plant-derived products, so that you’re not only getting the THC or CBD, but you’re also getting minor cannabinoids as well, right? So it presents an opportunity for derivative-based products, for pharmaceutical products, to really be a game-changer in terms of what the market looks like. So it’s very exciting, and it’s very different than the synthetic cannabinoids that are being developed right now, because this is, you know, today, many products such as insulin and many vitamins are produced with this methodology. It’s not just about alcohol, but there’s lots of products produced in this manner.

James West: Is that right, eh? So then, this is basically, you’re able to replicate the entourage effect of all the cannabinoids and CBDs, CBGs present, for maximum effect, I guess?

Greg Engel: Yeah. You’re going to have those core cannabinoids, major cannabinoids, and then you’re going to potentially add a plant base for some product extracts so that you can get those minor cannabinoids to have the entourage effect.

James West: I see.

Greg Engel: So – and again, where I think this really presents tremendous opportunity is as we move into, you know, edible products, derivative-based products, food products, and beverages, then you’re in a position to have a source that can be infinitely scalable, right? If you think of this, all you need to do to increase production is add another bioreactor and continue the process. So I see it playing a role in terms of the tremendous potential for us as a company and the partnership that we’re formed with Hyasynth, and it’s great to invest in a Canadian company as well, and advance the science.

James West: Sure. It’s a Canadian technology, then?

Greg Engel: Canadian technology based out of Montreal, and the research group, and Kevin Chan, who’s the CEO there, is a phenomenal group, and we’ve been talking to them for almost a year now before getting this deal done.

James West: Wow, fantastic. What about the cost to produce a similar quantity of extract via this method? Is it similar, is it cheaper?

Greg Engel: Yeah, so they’ve been originally operating under an exemption license, and now they have a dealer’s license as well, so they’ve been producing on a small scale kind of tabletop, and our investment is really towards working on a contract manufacturing site for them to maximize their process and really make sure it gets up and running, and then secondly, to build their own facility. So again, this is not about, you know, the scale that you’re talking about for a cannabis facility; it’s really still small scale pharmaceutical biotech facility, so we should be able to produce major cannabinoids at a fraction of the cost that we use today to produce them from plant-based.

James West: Wow. So is it conceivable that, at some point, this might actually replace plant agricultural cannabis production?

Greg Engel: In part, so it has the potential to do that in part, because if you think the difference is – you know, we believe there’s always going to be a place for plant-based product and certainly, you know, why we’re focused on producing a premium flower is there’s always going to be a demand for a premium flower. But as you move into those derivative-based products, it has the potential to be a source that can replace a lot of the production that’s plant-based. So it’s a really exciting opportunity for us, and a great partnership that we’re very excited about.

James West: Yeah, well, it sounds fascinating. I’m going to look forward to visiting that factory, too, because that sounds like a complete, you know, innovation in the space. I’m really interested to see where it goes.

Greg Engel: It is. It has the potential to be game-changing, and we’re glad to be working with them.

James West: Right. Well, let’s leave it there for now. We’ll come back to you soon and see what else is new. Thanks for joining me again, Greg.

Greg Engel: Okay. Thanks, James.

More Great Cannabis Content Below: