In the U.S. and globally, there is an explosion in demand for cannabinoids, naturally occurring components of the cannabis plant, for medical research purposes.  The overarching problem, however, is that the natural extraction technologies that dominate the field today are chock full of issues, including high costs and potential for contamination.  While the bias still leans towards natural methods, ultra-pure synthetic cannabinoids – which some pundits consider the future of the space – are gaining traction, with Noramco, the biggest name in the API business leading the way, with Willow Biosciences (CSE: WLLW) now by its side shepherding a next-generation manufacturing process.

Although more research is necessary, the days of eyebrow raising over the medicinal value of cannabinoids, including the two most famous, CBD (cannabidiol) and THC (tetrahydrocannabinol), are fading in the rear-view mirror with a myriad of clinical trials now initiated.  Any real doubts surrounding medical potential were effectively squashed by GW Pharma (NASDAQ: GWPH) garnering FDA approval for Epidiolex, indicated for two rare forms of drug-resistant, childhood-onset epilepsy last year, marking the first ever green light by the FDA for a non-synthetic cannabis-based drug.  The active pharmaceutical ingredient (API) in Epidiolex is CBD.

The first synthetic cannabis drug was Marinol, a THC-based drug now marketed by AbbVie (NASDAQ: ABBV) that was first approved in 1985 for treating nausea in chemotherapy patients.

Noramco’s roots in cannabis go back more than 15 years, when it invested millions of dollars in R&D and equipment to successfully help a customer develop a generic alternative for Marinol.

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While cannabis remains illegal at the federal level in the U.S., 33 states have approved the plant for medical purposes.  At least 20 common conditions, such as arthritis, glaucoma, inflammation and chronic pain, qualify under current laws, in addition to hard-to-treat conditions like cancer, epilepsy and Amyotrophic Lateral Sclerosis (ALS).

Partnering With a Giant

Noramco, once a unit of Johnson&Johnson (NYSE: JNJ) until it was acquired in 2016 by private equity firm SK Capital for a reported $800 million, is the top supplier of controlled substance APIs in the United States and the world’s largest producer of pharmaceutical APIs.  The company has demonstrated capacity for 750+ tons per year of finished API and intermediates.

Since the acquisition and appointment of James Mish as CEO, Noramco has put an emphasis on its cannabinoid business, betting big that synthetics are the future of cannabinoid APIs.  Now, Noramco is the juggernaut of the space, offering 35 different cannabinoids APIs, all of which are produced via chemical synthesis, not natural extraction.  In fact, Noramco is leaps and bounds ahead of the pack as the only CMO using chemical synthesis to make commercial quantities of pharmaceutical-grade CBD and THC.  The company currently stocks research quantities of ten cannabinoids shown to have potential therapeutic benefits, along with about two dozen others.

Now, through a new Joint Development Agreement (JDA) with Willow Biosciences, the two companies are looking to further cement their names as pioneers in the synthesis of cannabinoids.

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The Benefits of Synthetic Production

It takes a brief understanding of today’s technologies to understand the merits and potential of what Willow and Noramco are aiming to accomplish.  Simply put, purity, consistency, standardization and costs are hallmarks of APIs.  Without getting into the minutia as we did here, natural extraction has limitations in all of these aspects compared to synthesis methodologies.

Armed with data showing their CBD produced synthetically is 1,000x lower than the FDA’s guidelines of <0.1% THC, Noramco’s Wen-Chun Zhang, Senior Principal Scientist, Pharmaceutical API Process Development, detailed the case for mainstream adoption of synthetic CBD APIs in a presentation at the American Association of Pharmaceutical Scientists in Washington, D.C. in November.  Amongst other things, Dr. Zang said that their production methods that produce ultra-pure molecules are “way ahead cost-wise” compared to other purification methods.

Willow, a company with deep experience and success in synthetic biology, believes it has a key to a new generation in cannabinoid APIs that is pharmaceutical grade with shorter production times and less expense.  To that end, the company estimates that costs for producing multi-ton quantities of high-purity CBD with its synthetic biology technology can be slashed by about 60% from that of Noramco’s chemical synthesis, which were already lower than natural extraction by about 40%.

Synthetic biology, or biosynthesis, is a newer technology clearly differentiated from chemical synthesis.  In short, chemical synthesis uses, as the name implies, chemicals to create a chain of reactions resulting in the desired compound.

Biosynthesis breaks down natural processes into individual parts, analyzes the steps and then re-creates the process in the lab setting with the opportunity to make enhancements where possible.  Ultimately, it provides the opportunity to meet market demand by rapidly scaling volumes because it doesn’t rely upon production cycles of the cannabis plant.  Further still, it is clean, eliminating any threat of residual pathogens, heavy metals from the soil and any other possible contaminants in the conventional extraction process.

This goes without mentioning that there is an established regulatory pathway for synthetic drug manufacturing, a fact that the plethora of natural extraction techniques does not enjoy.

The JDA with Noramco lays out the plan to prove the case for biosynthesis as a new standard for cannabinoid APIs.

The seasoned team of scientists at Willow didn’t draw this idea out of thin air.  Led by Chief Scientific Officer Dr. Peter Facchini, has made great strides in identifying the unknown steps in the opium poppy pathway that is believed to be responsible for the opioid addiction pandemic.  These advancements allow the company to explore for non-addictive opioids.  If all goes well, Dr. Facchini believes that they are about two years away from having a new, non-addiction pain drug (yeast-based thebaine as the API) as an alternative to the likes of morphine and oxycodone to hopefully stem the ever-growing presence of opioid-related deaths.

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As it relates to cannabinoids, Willow has proven its ability to biosynthesize API at commercial scale through its work with thebaine.

Meeting of The Minds

Per the pact with Noramco, Willow will be responsible for optimizing yeast strains in a biosynthetic process that will generate ultrapure CBD at high yield and at substantially lower cost compared to current methods.  Noramco will leverage its decades of knowledge in producing CBD and related compounds and its experience in delivering them in clinical and pharmaceutical applications to shoulder scale-up, regulatory submission, marketing and distribution.

That bears repeating for Willow investors.  Noramco, the world’s biggest supplier of pharmaceutical APIs, will take care of all the leg work to get the new products through regulatory agencies and into the massive distribution network.

Each company will retain their respective intellectual property and share equally in gross profits from future sales for any products manufactured under the JDA.

“The addition of biosynthetic CBD production will augment Noramco’s ability to work with our existing customers and the capacity to address the rapidly increasing market demand for CBD-based APIs and ingredients from pharmaceutical, nutraceutical, consumer packaged goods, beverage and other industry sectors,” said Bill Grubb, Noramco’s Chief Innovation Officer and VP Global Business Development, in a statement on the new agreement with Willow.

Mr. Grubb was touching on expectations that the new cannabinoid APIs will have a bevy of potential applications, ranging from CBD beverages and creams to pharmaceutical uses (100’s of clinical trials are currently ongoing).  Cumulatively, the market size for CBD packaged consumer goods and CBD pharmaceuticals is estimated to reach $41 billion by 2025, according to Ackrell Capital 2018 Cannabis Investment Report, creating a more than favorable opportunity for a best-in-class API that sits at the center of each and every one of those products.

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For more information on the company: www.willowbio.com

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