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What is the background of the cannabis company invested twice by Li Ka-shing?

Demetrix, a hemp technology company, has completed a $50 million A round of financing for cannabinoid biosynthesis. Tuatara Capital led the round, and seed round investor Horizons Ventures also participated.

Horizons Ventures, as Li Ka-shing’s personal investment agency, has invested in Facebook, Skype, and in recent years has bet on artificial meat, encrypted assets and other frontier areas, investing in Zoom, Impossible Food, Bakkt, Slack and other companies.

What’s Demetrix’s background, what’s its advantage, why is it favored by Li Ka-shing’s personal investment institutions and participated in investment twice?

 

Key Technologies: Cannabinoid Synthesis by Yeast

Demetrix’s most interesting technology is cannabinoid synthesis by yeast. This technology is very similar to beer fermentation, but it uses genetically modified yeast cells to ferment cannabinoid.

But Demetrix is not the sole producer of cannabinoid synthesized by yeast. Several companies are involved, such as CB Therapeutics and Hyasynth Bio, a Canadian startup, to enter the cannabinoid synthesis market, and Intrexon Corporation and Surterra Wellness to co-invest. InMed Pharmaceutical Co. is also actively engaged in the biosynthetic cannabinoid project to promote commercial production of fermented cannabinoid based on $100 million.

Demetrix’s advantage is that Demetrix can obtain the exclusive license of its founder Jay Keasling’s research team in Berkeley, which is its absolute competitive advantage.

Demetrix's advantage is that Demetrix can obtain the exclusive license of its founder Jay Keasling's research team in Berkeley, which is its absolute competitive advantage.

Key person: Jay Keasling

Jay Keasling, founder of the company and professor of chemical engineering and bioengineering at the University of California, Berkeley, is currently focusing on the development of Engineering Chemistry and genetic tools within microorganisms and one of the most important authorities in synthetic biology.

On February 27, 2019, Nature published a research paper on the chemical synthesis of cannabinoids and their unnaturalanalogues in yeast by enzymes, namely Complete biosynthesis of cannabinoids and their unnaturalanaloguesin yeast. Using galactose as raw material, heterologous reconstruction of cannabinoids biosynthesis pathway was completed in Saccharomyces cerevisiae, including cannabis. Biosynthesis of terpenoid phenolic acid (CBGA), tetrahydrocannabinol (THCA), cannabinol (CBDA) and their derivatives. Professor Jay Keasling, Ph.D. Hou Luo Xiaozhou of the Institute of Quantitative Biological Sciences, University of California, Berkeley, is the co-author of the paper.

After the publication of the results, it aroused wide repercussions. Jay Keasling subsequently established Demetrix in California and was authorized from the University of California, Berkeley, to use yeast fermentation technology to produce cannabinoid.

Prospects are promising: the demand for cannabinoid from edible cannabinoid products, medicines and daily chemical products is rising

A variety of cannabinoids have been proved to be of great medical value. The report released by Grand View Research Inc, an international market research company, predicts that the global market value of cannabis for medical use will be as high as $55.8 billion by 2025. At present, THC and CBD are mainly used for medical applications and drug synthesis. There are 306 CBD clinical trials in major countries and organizations around the world. In the future, a large number of safe and stable cannabinoid raw materials will be needed for drug delivery to the market.

a large number of safe and stable cannabinoid raw materials will be needed for drug delivery to the market.

In addition, cannabinoid-based food and beverage has become one of the popular trends in North America, and BDS Analytics, a company that studies the cannabis market, has published a report on the edible market of cannabis, which shows that expenditure on cannabis edibility is expected to increase from $1.5 billion in 2018 to $4.1 billion by 2022.

Cannabis skin care is also one of the trends in the future. Jefferies analysts predict that in the next decade, CBD alone will be able to reach $25 billion in beauty products and will account for 15% of the skin care market.

On the other hand, cannabis ban has not been lifted worldwide. Planting and production are still under supervision. How to solve the legislative problems and shortage of raw materials, perhaps biosynthesis is a good way.

biosynthesis

At present, there are more than 130 cannabinoids, of which only about five or six have been studied. The content of cannabinoids in hemp flowers and leaves is only 0.1%, 0.01%, or even 0.001%, so the cost of extraction can be as high as 100,000-350,000 US dollars per kilogram.

Cannabinoid synthesis by yeast will greatly reduce the cost of synthesis and expand cannabinoid production capacity. In February, when Jay Keasling’s team published their paper, yeast cannabinoid production was THC 8 mg/l and CBD less than 8 mg/l, but now the company’s production has increased by several orders of magnitude. Jeff Ubersax, chief executive of Demetrix, said the company would continue to expand production to 2,000 to 20,000 litres by 2020.

Is there any other correlation between Li Ka-shing’s two investments in Demetrix?

In September 2017, Jay Keasling collaborated with Shenzhen Advanced Institute to establish a laboratory of synthetic biology.

Following the release of the results of the Jay Keasling team in February this year, the Jay Keasling team signed an agreement with a domestic biotechnology enterprise in Shenzhen Advanced College. The two sides will invest tens of millions of dollars to establish a joint laboratory. As for which company, whether it cooperates with biosynthetic cannabinoids has not been disclosed, but is it Demetrix’s first opportunity to attract Li Ka-shing’s investment?

Shenzhen Advanced College

In addition, many Chinese researchers have participated in the research of cannabinoid synthesis.

If we are careful, we will find that besides this project, many Chinese enterprises and research institutes have participated in the research of synthetic cannabis project.

We have previously reported that ICC International tobacco Corp. has completed its $1.2 million strategic investment in Biotii Technologies Corp., a private biotechnology company in Boston, Massachusetts. Biotii is also a company that synthesizes cannabinoids genetically, and its news reveals that Biotii has established an important partnership with leading medical research institutions in China. The Biotii Leadership Team also includes a Chinese, labeled as a graduate student of Xiamen University and co-founder of a government-funded start-up company.

china cbd synthesizes cannabinoids

This also shows that China has entered the field of biosynthetic cannabinoid early and is expected to become a strong player in this field. Whether it can truly achieve commercial production depends not only on technology, but also on the legislative environment. At present, there is no clear statement about the synthesis of cannabinoid at home and abroad, and wait and see.

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