A $255 million deal to convert sugar into cannabis-chemicals is opening the door to an era of pot without plants.
Amyris Inc. already works with genetically modified yeast that excrete designer molecules to make sweeteners and skin-care products. Now it plans to use that fermentation technology to convert sugarcane syrup into the active ingredients found in marijuana, the California-based company said in a statement Tuesday. Those ingredients can be used in consumer products ranging from beverages to skin creams and deodorant.
The projectâ€™s initial focus is to make cannabidiol, or CBD, the molecule used to treat medical conditions such as anxiety and sleeplessness. But Amyris and its undisclosed partners are targeting multiple cannabidiol molecules that have medical and therapeutic uses without being psychoactive, spokeswoman Beth Bannerman said by phone. THC, the mind-bending molecule that gets people high, is not a focus, she said.
Amyris surged as much as 50% on the news, the most since the shares began trading in 2010.
â€śWe share the mission of our partners to become the leader in sustainably-sourced CBD products in the near term as we focus on enabling the global beverage and skin care markets,â€ť Amyris Chief Executive Officer John Melo said in a statement.
Amyrisâ€™s venture comes on top of two smaller deals announced in September that also aim to ferment cannabinoids. Marijuana producer Cronos Group Inc. struck a $122 million partnership with Ginkgo Bioworks Inc., and Organigram Holdings announced a C$10 million ($7.6 million) strategic investment in Hyasynth Biologicals.
By manufacturing CBD and other cannabinoids in a brewing process, makers can control quality and dosage, Amyris said. Cutting plants out of the equation ensures the molecules will be completely free of pesticides.
The marijuana molecules Amyris produces could be used in the companyâ€™s current slate of products, Bannerman said. Amyris makes Biossance, a skin care line sold at Sephora cosmetics shops, and it recently introduced a zero-calorie beverage sweetener.
Interest in pot-infused drinks is soaring now that cannabis is legal in Canada and hemp-derived CBD is legal in the U.S. Canadian pot company Canopy Growth Corp. is spending up to $150 million on a facility in New York to extract CBD from hemp.
Constellation Brands Inc., maker of Corona beer, has invested $3.8 billion in Canopy Growth, while Molson Coors Brewing Co. has started a joint venture with Quebec-based Hexo Corp. to sell nonalcoholic cannabis drinks. Even Coca-Cola Co. has said itâ€™s interested in CBD-infused beverages, although it doesnâ€™t have immediate plans to enter the market.
Plant-based CBD also can be found in personal-care products including moisturizing creams to deodorants and soaps, mostly made by small manufacturers.
Amyris said its deal includes payments over three years, after a definitive agreement is signed, that could total $255 million in cash if the effort proves commercially viable. Royalties on commercialized products would be additional, the company said. More details on the partnership will be provided in March, Bannerman said.