Amyris Signs $300M Deal For Fermentation-Derived CBD Products

Amyris Inc AMRS shares were rallying Tuesday following the announcement of a cannabinoid development, licensing and commercialization agreement.

What Happened

Amyris, which produces ingredients in the health and wellness, clean beauty and flavors and fragrances markets, said it has clinched a deal with newly formed LAVVAN Inc., which is working on bringing the first fermentation-derived cannabinoid products to market.

The announcement comes after a previously announced term sheet and includes further milestone payments related to additional targeted products.

Amyris, with its expertise in terpenes, said it will leverage its automated processes and R&D staff in the development of cannabinoid pathways.

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LAVVAN will take up the global manufacture and commercialization of cannabinoids. The agreement calls for LAVVAN to pay Amyris $300 million of R&D and milestone payments plus long-term royalties.

Amyris said it is confident of earning a significant portion of these milestone payments by the end of 2020, with $20 million to $30 million anticipated in 2019, including a $10-million milestone payment that is expected later this month.

Separately, Amyris reported fourth-quarter results Monday, with the company reversing to a loss of 76 cents per share on a non-GAAP basis from a profit of 76 cents in the year-ago period.

Why It's Important

CBD derived from fermentation is likely to have consistent purity and dosage and an improved yield of economically difficult-to-source "rare" CBS, according to Amyris. 

"Based on our known success in bringing fermentation-based products to market and our demonstrated expertise in producing plant compounds in yeast, we have high confidence in achieving the partnership goals," Joel Cherry, president of R&D at Amyris, said in a statement.

Amyris shares were trading up 5.25 percent at $4.01 at the time of publication Tuesday. 

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