HOUSE_OVERSIGHT_024834.jpg

COWEN COLLABORATIVE INSIGHTS February 25, 2019 _ Need For Alternative Methods To Produce Cannabinoids Cannabis plants can exhibit wide variation in the quantity and type of cannabinoids they produce. However, cannabinoids are only produced in limited quantities regardless of the strain; in total, cannabinoids account for <1% of the dry weight of the cannabis plant. Selective breeding has led to strains of the cannabis plant that produce relatively large amounts of the intermediary forms of THC and CBD. While THC content varies substantially among cannabis strains, it generally represents 15-35% of the cannabinoid content of the plant, and CBD is typically 1-12%. The relative abundance of these compounds have allowed them to be well studied and their diversity of applications have created a large commercial market. After THC and CBD, the remaining cannabinoids are found only in trace amounts in the plant. Compounds such as THCV, CBG, and CBC have elicited therapeutic interest, but because they are only present in minute amounts they have been difficult to extract and purify and impossible to produce at commercial scale. This has limited their study up to this point. Alternative Methods For Producing Cannabinoids To combat the limited availability of cannabinoids using cultivation-based methods, alternative approaches have been developed that use chemical and biotechnological synthesis to produce cannabinoids. Chemical Synthesis Chemical synthesis methods use organic chemistry to produce cannabinoids; however, the process has several drawbacks. Chemical methods have largely failed to be cost effective for commercial scale cannabinoid production because of the complexity required to produce the cannabinoid molecules, and extensive purification is needed to obtain a high quality product. Commercial chemical synthesis also generates large amounts of organic waste, takes several weeks to produce kilogram quantities, and is expensive. As such, practical methods for the chemical synthesis of many cannabinoid molecules has not been developed. Biotechnological Synthesis (Synthetic Biology) An emerging alternative to traditional cultivation and chemical synthesis is the use of biotechnology-based approaches to produce cannabinoids. These synthetic biology approaches produce cannabinoids through modifying the metabolism of genetically engineered organisms. This converts the organism into a biological factory, producing the desired cannabinoid in large quantities. Compared to chemical methods, biosynthesis methods are more cost effective, scalable, and environmentally friendly. Compared to traditional methods, biosynthesis of cannabinoids is potentially more sustainable, more reliable, faster, and less expensive. Biosynthesis does not require as much water or energy input, is not subject to weather or other exogenous factors, takes ~3-5 days to yield an end product vs. traditional methods taking up to 4 months, and is theoretically less expensive. Additionally, growing cannabis often involves using several hard-to-remove impurities (e.g., pesticides), that could potentially create significant safety issues and other undesirable dynamics. Furthermore, purity and regulatory 18 COWEN.COM HOUSE_OVERSIGHT_024834