Biotech company Intrexon Corporation (NASDAQ: XON) and cannabis company Surterra Wellness (Surterra) announced an exclusive global licensing agreement. The two companies will join forces to help Surterra’s cannabinoid production by using Intrexon’s proprietary yeast fermentation platform. According to the company statement, yeast fermentation of cannabinoids provides advantages over conventional plant-based extraction.
The Proprietary Tech
The $100 million deal, including milestones and royalties, is meant to bring new cannabis products to market with greater supply chain security, in a more consistent, efficient and cost-effective way. Intrexon’s proprietary yeast strain engineering enables fermentative production of cannabinoids – the compounds in cannabis plants that produce various health and wellness effects – as well as other cannabinoids not found in the plant itself.
The proprietary fermentation process develops strains of yeast that can produce a wide spectrum of cannabinoids, including those that are rare and difficult to extract, at a large scale. The process introduces plant genes into yeast, screens for best cannabinoid strains for productivity and purity, and isolates those with prized health benefits. The high-throughput technology approach can analyze thousands of yeast strains a week.
“This significant and strategic investment with Intrexon means Surterra can ramp up our research and development of specific cannabinoids, to ultimately craft cannabinoid products to meet the future demands and needs of our customers. This transformative deal with Intrexon gives us a leading edge as we enter a new paradigm in cannabis, where the industry leaders will be those who have expertise in building global brands and in research and innovation. Imagine a day when technology and science leads to breakthrough cannabis-based therapeutic alternatives to pharmaceuticals that can be made available to consumers globally,” said Surterra Chief Executive Officer William “Beau” Wrigley, Jr.
Intrexon will receive a $25 million technology access fee – $10 million in cash upfront and $15 million in Surterra common shares. Additionally, Intrexon expects to receive approximately $20 million in R&D expense reimbursement over the next five years, developmental milestones on each cannabinoid developed, and royalties on each cannabinoid commercialized.
“Intrexon has a successful history of being an innovator and remains on the cutting edge of multiple industries, including food production, disease treatment and now cannabis. After meeting with RJ and the team, as well as visiting their microbial production lab in Budapest, it was clear we had found our partner for this exciting project,” said Jay Holmes, Executive Director of Strategy at Surterra Wellness and architect of the deal.
This is the second strategic deal between Surterra and Intrexon in three months, with the first partnership focusing on Intrexon’s Botticelli next-generation plant propagation technology to improve Surterra’s cannabis plant production efficiency, yield, and quality for Surterra’s specific cannabis cultivars in Florida.