Algae-C is a biosynthetic company using algae to produce cannabinoids. Founder and President Dr. Mather Carscallen emphasizes the superiority of algae as a chassis because it can be grown in a variety of ways and is not dependent on specific inputs for growth. In addition, algae have an abundance of the natural precursors to grow cannabinoids, unlike yeast and bacteria. Dr. Carscallen also highlights the usefulness of algae waste products as a super food because it produces high levels of Omega 3, protein, vitamins, and minerals. He reveals that the company is undertaking commercial growth trials this summer and plans to achieve commercial scale production of cannabinoids by Q1 or Q2 2020. Many at Algae-C, including Dr. Carscallen, have significant experience producing algae at a commercial scale in the alternative fuels industry. While Dr. Carscallen believes there will always be a purist market for products derived from plant material, he suggests that biosynthetic cannabinoids will be a game changer for the space from a consistency, quality, and price perspective.
James West: I’m joined now by Dr. Mather Carscallen. He is the President and founder of Algae-C Inc. Mather, welcome to the show.
Mather Carscallen: Thanks very much.
James West: Mather, let’s start with an overview: what is it, exactly, that Algae-C does?
Mather Carscallen: So we’re a biosynthetic cannabinoid company, and as our name states, we produce biosynthetic cannabinoids using algae.
James West: Does that mean that you can use algae to grow plants?
Mather Carscallen: So for argument’s sake, algae are like microscopic plants. So we’re basically taking the genes from cannabis plants and we’re putting them in the algae so that they produce cannabinoids.
James West: And so what cannabinoids can be produced? Which ones can’t be produced, or is there any such limitation?
Mather Carscallen: There’s not really a limitation. The only limitation is just the time and energy needed to perfect the actual gene insertions and finding the strain of algae that will produce it in the quantities and quality that you’re looking for.
James West: Okay, and why algae? I mean, others are trying to develop biosynthetic cannabinoids on yeast and bacteria, for example; what attracts you to algae?
Mather Carscallen: Right. So I mean, you can really start to see the superiority of algae when you break it down into kind of three steps. So I mean, you’ve got your inputs, your nutrients; then you’ve got the organism itself; and then you’ve got all the waste products and the outputs of the back end.
So if we look at the inputs, yeast and bacteria pretty much all require sugar to grow, so now you’re competing with the food industry. You also need a pre-processed nutrient source in order to feed them. In addition, the actual growth of it has to be in a fermentation tank. So you’re very limited in how you can grow algae, where you can grow it, where you can source that sugar.
Alternatively, Algae-Can be grown using sunlight and carbon dioxide. They can be grown using sugar, they can be grown using chemicals, and also just like a myriad mixture of all of those combined. So you’ve just got much more of a versatile organism that can be grown, you know, anywhere in the world, using the, you know, abundant resources of that area.
When we move onto the organism itself, I like to think of all the microorganisms as a little assembly line. So you have inputs come in, a bunch of processes happening, you have an output come out. So if you look at bacteria and yeast, they would be like a car assembly factory where you’d have to buy the chassis and your doors and your seats from another producer, and then it would put the engine in and complete the product, right? So they don’t naturally have all the material inside of them needed to produce cannabinoids.
Algae are different in that they have all the natural precursors for the cannabinoids, naturally abundant inside of them. So you can produce your car from scratch.
And then lastly you’ve got the output. So I think this is where a lot of companies have failed to sort of look into, in that once you produce your actual cannabinoids and you extract them, what are you going to do with your waste products? So algae are beautiful in that they have an abundant of utilities. I mean, they’re high producers of Omega-3s, they’re high in protein, vitamins, minerals, so they’re a superfood that is branded and is naturally, you know, abundant across the world and also from a consumer perspective is a very consumer-friendly product.
James West: Okay, so the sort of Holy Grail in biosynthetics is producing cannabinoids in sufficient quantity and at a rate where the economics make sense. So in order to succeed, you need to be able to produce cannabinoids at a fraction of what they’re produced for through cultivation.
Mather Carscallen: Correct.
James West: And so, where are you at in that sort of process? Have you actually evolved to the point where you can produce commercial quantities of CBD and THC using algae at commercially preferable prices relative to cultivation?
Mather Carscallen: Right. So we plan for the worst and we hope for the best. So in a worst-case scenario, we’re looking at about a 1 percent concentration in the algae. And so given that concentration, we’re still looking at a $350 a kilo for pure cannabinoid extract. So even in our worst-case scenario, we’re very strong from a business standpoint.
James West: Okay, and so how soon, then, until you’re actually producing cannabinoids in commercial quantities?
Mather Carscallen: So Q1, Q2 of next year is the schedule for hitting commercial scale. So the commercial growth trials start this summer, in addition to expanding out our portfolio of different strains and species of algae that we’re using.
James West: Wow. And is it your expectation that producing cannabinoids on algae is going to largely disrupt cannabinoids from cultivated sources?
Mather Carscallen: I think that there’ll always be that purist market that will exist out there – people that want the cannabis plants.
James West: You mean dried flower?
Mather Carscallen: Absolutely. But yeah, I think that biosynthetic cannabinoids are completely going to change the name of the game, both from a consistency and a quality perspective, and just a price perspective. And it also opens up doors into the pharmaceutical industry, right, which is something that hasn’t really been able to happen at a proper scale.
James West: Have you considered that the market is going to be somewhat resistant to the concept of a genetically modified organism as a source for cannabinoids?
Mather Carscallen: I mean, the reality is, pretty much everything we eat is genetically modified, right? You know, to a certain extent, everything in nature is genetically modified; it just takes longer in order to do it.
The nice thing about using algae as opposed to a yeast or a bacteria is, algae are, as I said earlier, just a microscopic plant; so you’re basically just having one plant do the work of another one, just more efficiently, as opposed to using something like a bacteria or yeast, which just doesn’t fit as well.
James West: Research has shown that some of the minor cannabinoids, which are not generally available in high quantity naturally in a cultivated plant, might be of high scientific value, clinical value, to different indications in patients. Is it conceivable that you will be able to target specific minor cannabinoids and express them in commercial quantity, far superior in a far superior way than to cultivated cannabis?
Mather Carscallen: Yeah, absolutely, and this is where it really gets cool. I mean, at the end of the day, anybody that’s in biosynthetic cannabinoid production is really developing a methodology, right? It’s a process. So the end goal, I think, for everybody, is a client-driven, designer microorganism that produces, you know, a biochemical profile of cannabinoids and other high-value-add products that meet the requirements of the client.
So you could have a patient come forward or a company come forward saying ‘I want to treat X, Y and Z symptoms or ailments. Here’s the profile we’re looking for.’ You know, turn all the knobs, tweak all the buttons inside your algae, and out comes essentially a designer gene algae strain.
James West: Ooh, that’s exciting. I don’t know if the world’s ready for that yet! What are the other elements that are going to be required to successfully commercialize algae-grown cannabinoids in terms of regulators?
Mather Carscallen: So I mean, obviously it has to be approved that you can produce cannabinoids from a different plant, right? I think that there’s still a little bit of a grey area now. You know, we’re not growing cannabis plants, but at the end of the day, as soon as you produce those cannabinoids and they’re extracted, you still have a cannabinoid. So obviously, the regulations need to, you know, form and continue to develop to incorporate this, and I think we’re heading in the right direction for that.
James West: What is to say that algae is the better way relative to the people who are growing on bacteria and yeast who also are making representations that they, too, soon will be able to produce it, and they’ll be able to produce it cheaper than anybody else. Like, is anybody ahead of you? Do you view anybody in the industry ahead of you?
Mather Carscallen: I think that one of the biggest advantages that we have is that there’s no mystery on how we’re going to commercially produce the algae, and this is a big problem. So you saw this in the algae biofuel industry 10 and 15 years ago, where at a lab scale, and even, you know, semi-pilot scale, the results were incredibly encouraging, and everything was working, and as soon as they went to a commercial scale, all hell broke loose.
I mean, I think the States put in a billion and a half alone into the algae industry by the time they actually had gotten their commercial plants up and running and stabilized and then ready to go. So when you look at yeast and bacteria, you just don’t have the same track record. You don’t have all those mistakes that were made in the past.
So for us, you know, the science is one half of it, but the production is not a challenge for us. So we bring, both myself and the rest of the team, our expertise and our background is the production of algae at a commercial scale.
James West: The government of Canada has made an investment in your company, have they not?
Mather Carscallen: Back in the day, yeah. And so yeah, I think you’re referring to the grants.
James West: Right.
Mather Carscallen: Yeah. So we work closely with multiple organizations within the Federal and Provincial governments, helping support our teams. That’s how we’re supposed to, or that’s how we’re able, to have such a large and highly qualified team without running, you know, 15, 20 million in terms of investments today.
James West: And so where are you developing your technology?
Mather Carscallen: Yeah, so we have three universities that we use. We use the University of Three Rivers, there’s SEENET, which is a college which is co-located, and then there’s Dalhousie University. So it’s set up so that the metabolic engineering is in Three Rivers, then we’ve got the actual scale-up and production in SEENET, and then we’ve got the quality control in Dalhousie.
James West: Okay. Are there any difficulties or complexities in extracting cannabinoids from algae?
Mather Carscallen: No. so I mean, this is one of the other beautiful things is, it’s essentially just another plant; so it’s another plant biomass. So it’s completely drop-in friendly with the current infrastructure, so supercritical CO2 extraction, chemical extraction, mechanical press, or just don’t even extract it, right? Just eat the algae.
James West: [laughter] Eat the algae! Okay, so how much more capital is Algae-C going to be requiring to get to commercial viability?
Mather Carscallen: So we’re doing a raise right now, so we’re doing a raise for 3 million right now, and that’s going to essentially take us to a point where we’re ready to commercialize.
James West: Wow. Do you have any relationships in the developmental stage with any end users?
Mather Carscallen: We’re talking to quite a few organizations at the time.
James West: Okay, so what would be the first range of products you’d be targeting?
Mather Carscallen: So obviously the majors, right? The THC and CBD. And the rationale behind that is, I think when you look at the biosynthesis sector, a lot of people are targeting a lot of different compounds, and most of the companies don’t have a huge team. I mean, we don’t all have $250,000,000 bank account with, you know, 300 employees and our own private, massive R&D facility. So the more products that you end up working on, the more thinly spread you are, so it just becomes harder to actually produce quality work out the back end.
So we wanted to focus on, let’s get the majors out of the way and then let’s start diversifying our product portfolio, both in terms of cannabinoids, terpenes, and then other products, as well.
James West: Okay. Mather, we’re going to leave it there for now. That’s a great intro to the company; we’ll come back to you soon, and best of luck.
Mather Carscallen: Thanks very much.
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