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With Cronos Deal, Ginkgo Brings Synthetic Bio Approach to Cannabis

Xconomy Boston — 

In a partnership that gives new meaning to mixing pot and beer, Canadian cannabis company Cronos Group has teamed with synthetic biology firm Ginkgo Bioworks to try and develop better ways of producing the chemical compounds of cannabis in a lab.

Employees of Boston-based Ginkgo use robotic systems and software to design and test custom-made yeast and other microbes engineered—in a process similar to brewing beer—to secrete products such as rose-scented oil that goes into perfumes; sweeteners for beverages; and industrial enzymes used in laundry detergent. Ginkgo has been expanding its approach to additional sectors, including a $100 million joint venture with Bayer in agricultural microbes.

Now, Ginkgo is moving into cannabinoids. It will work with Cronos (NASDAQ: CRON) to develop fermentation processes for manufacturing tetrahydrocannabinol (THC) and cannabidiol (CBD), active chemical compounds that are found in cannabis. The partners also aim to produce lesser-known compounds that the plants produce in smaller quantities, which the companies say makes them difficult to extract in an economical way. If Ginkgo meets certain milestones, Cronos said it would fund approximately $22 million in research and development and manufacturing costs, and it would also issue up to 14.7 million common shares to Ginkgo, worth about $100 million.

The deal comes as cannabis gains wider public acceptance in North America. This year, Canada became the second country to legalize recreational marijuana use; marijuana for medical purposes has been legal there since 1999. In the U.S., 30 states have legalized medical marijuana, and nine states and Washington, DC, have legalized recreational marijuana use, according to Business Insider. Earlier this year, the FDA approved the first ever medicine made from a derivative of marijuana, a drug from GW Pharmaceuticals (NASDAQ: GWPH) for two rare forms of epilepsy.

The goal of the Cronos-Ginkgo partnership is to develop a way to more efficiently produce high-purity cannabinoids, both for recreational and medicinal purposes, Ginkgo CEO and co-founder Jason Kelly says. The cultured molecules will be identical to those extracted from cannabis plants, he says.

It’s not the first effort to make cannabinoids using synthetic biology. Hyasynth Biologicals, a Montreal, Canada-based startup, is engineering strains of yeast to produce cannabinoids for research purposes or to be sold in oils and pills, the company says on its website. And earlier this year, the government of Singapore launched a five-year, $19 million synthetic biology R&D project that will focus in part on creating cannabinoids for medicines. Kelly claims that the robotics and other automated technologies at his company’s 100,000-square-foot factory in Boston’s Seaport neighborhood give Ginkgo and Cronos an advantage.

“We think the way people do this work today is ineffective and inefficient,” Kelly says. “You need to move to a totally different infrastructure, or else these projects just spin out.”

As Ginkgo started exploring the idea of applying its synthetic biology expertise to the cannabis industry, the company found that most companies are “focused on growers—just adding more farms and producing the flower product,” Kelly says. Ginkgo was drawn to Cronos because it has invested in automation and advanced technologies in its facilities, and it “really had a focus on what are the actual active ingredients in the plant that create different effects?” Kelly says.

People are most familiar with THC, the compound that creates psychotropic effects. But there are other cannabinoids that have different effects, such as appetite suppression and pain relief, he says. “Cronos has this view that they really wanted to explore that scientifically,” Kelly adds.

Kelly says it might be tough for synthetic biology to dramatically improve upon existing processes for growing and extracting THC and CBD. But for cannabinoids that are present in lower quantities in crops—making them impractical or difficult to extract at a high purity or scale—he sees an opportunity to deploy fermentation to reliably produce them.

“Having a low-cost, pure form of a lot of these rare cannabinoids has not been available,” Kelly says. “I think there’s a good opportunity to explore some interesting therapeutic opportunities there, whether it’s full-on, FDA-approved drugs … or things more over the counter, like pain relief alternatives.”

Of course, there’s a lot of work ahead, and no guarantees that the work will turn into commercial products, especially in the case of therapeutics that will require clinical trials and regulatory approval. Kelly says Ginkgo’s research and development work for the Cronos partnership is expected to last three years. If successful, Cronos would handle larger-scale manufacturing and commercialization of the products, he says.

[In the photo above, a robotic system works with colonies of bacteria at Ginkgo’s Boston facility. Photo courtesy of Ginkgo.]