Demetrix Inc CEO on Potential of Cannabinoid Biosynthesis and Series A Financing

Demetrix Inc is a biosynthesis company producing rare, natural ingredients via fermentation. CEO Jeff Ubersax states that the company’s goal is to produce rare ingredients at a higher purity and consistency than traditional sources for use in consumer packaged goods in the pharmaceutical, health supplements, and cosmetics spaces. Ubersax reveals that the first ingredients Demetrix is planning to bring to market are cannabinoid-based. He credits the company’s seed financing round, in which Demetrix raised approximately $11 million, with allowing the company to put together an experienced team. He suggests that new technology, both on the plant side as well as the microbe side, will bring the cost of goods down; however, he believes that fermentation-derived products will be the most cost effective way to produce the rarest cannabinoids. Demetrix is in the midst of Series A financing and hopes to close this capital raise within the next couple of months.

Transcript:

Narrator:     Demetrix Inc is a privately held biosynthesis company. The company uses genetics and computing enabled deciphering technology to produce drugs and engineer strains to produce co-evolved and bio-inspired medicines and nutraceuticals.

Demetrix was founded in 2015 and has raised over $11 million in seed funding led by Horizons Ventures.

James West:   I’m joined now by Jeff Ubersax. He’s the CEO of Demetrix, Inc. Jeff, welcome to the show.

Jeff Ubersax: Thanks for having me. I appreciate your time.

James West:   Sure, Jeff. Let’s start with an overview: what is the business of Demetrix?

Jeff Ubersax: Sure. So at Demetrix, our mission is to help the world benefit from nature’s rarest ingredients. So we use a combination of advanced automation, biotechnology and computing tools to produce rare natural ingredients by fermentation, and you know, the intention of the company is to help pharmaceutical, consumer products, supplement, health and beauty companies access rare ingredients at a higher purity and higher consistency than they can get from any other source, from traditional methods.

And you know, our first products that we’re planning on bringing to market are cannabinoids, and I think, you know, a really important thing to know about this space is bringing products to market through fermentation this way is hard. There are a lot of challenges, and I think that our company is particularly well positioned to solve some of these, you know. We’ve got a really fantastic seed round of about $11 million that has really allowed us to hire an exceptional team that has already had experience in this industry for bringing seven different yeast-derived products to market through scales of hundreds of metric tonnes.

And then I think the third piece of that is really being able to build, you know, the incredible set of technology that’s really required to do this well at scale and to bring these products to the market very quickly.

James West:   Very cool. So, biosynthesizing cannabinoids through the fermentation process, recently we were both at the biosynth conference put on by Paradigm Capital here in Toronto a couple of weeks ago, or last week, rather. There’s a whole bunch of disciplines that have to come into play in order to successfully do that at scale, profitably. So, how long is it going to take you, and where are you at in that entire process of merging all these disciplines under one thing to come up with this end product that’s in the money?

Jeff Ubersax: No, it’s a great question. I mean, I think that one of our advantages is, we started about 18 months ago, and one of the founding principles, to be successful at this, you really need to have good folks on the R&D side, the manufacturing side, the commercial, and then also regulatory. And so we’ve got people that have experience in all those different areas, and you know, I said it at the conference, I’ll say it again now: it’s super important, this is a big challenge, and having people that have done this before is a huge advantage, because you will already know some problems that you’ll encounter, and avoid them from the get-go.

So you know, I think that what that all adds up for us is that we’ve had a tremendous amount of philosophy over the last 18 months, to the point where we went from, you know, let’s see: we started, basically had a lab in September of 2017, and then today, already beginning our own internal work that we need to do to make some of our first regulatory filings with folks like the FDA, that we think is really required to bring these products to market.

James West:   Okay, so how soon until you’re actually putting out biosynths at a commercial scale?

Jeff Ubersax: So we’ve decided we’re not going to disclose our specific road map, but you know, I think the real question is, you know, how likely is it that this sort of technology is going to be able to get to the same kind of cost competitiveness as agricultural sources? And I think that, you know, there’s a pretty good history of these types of products from a handful of companies, and particularly in the pharmaceutical flavours and fragrances based, and human nutrition, in actually being able to get these types of products to scale and then, you know, selling them for, call it, $400 a kilogram and up. So I think there’s a lot of opportunity to really, you know, use this technology to be disruptive in the agricultural space.

James West:   The more I learn about biosynthetic cannabinoids, which I heard referred to as cellular agriculture, which I thought was an interesting term, the more I realize that, you know, we’re still probably a few ways out from broad commercial adoption of this as an input into edibles, beverages, pharmaceutical, consumer packaged goods, etcetera. A`nd in the same time frame that biosynthetic variants are progressing towards commercial realization, I gotta think that, in the agricultural space, they are also progressing towards the ability to essentially create through a different form of cellular agriculture, concentrates within the plant species and phenotypes and all of that through selective genetic engineering, etcetera.

Do you think that there’s any advantage in the costs and the timeline by pursuing a biosynthetic cellular agriculture approach, as opposed to a plant-based approach?

Jeff Ubersax: Yeah. So first, you know, I would say I would agree: plants are also cellular agriculture. What we do, I would say, is more broadly biotechnology or fermentation. There’s hundreds of thousands of products that are already made today through biotechnology fermentation, whether it’s vitamins or other types of nutrients that are going into foods and consumer product goods all the time. So I think that we like to just call it fermentation.

And I also agree that there’s, you know, a tremendous amount of new technology that’s being applied both on the plant side as well as on the microbe side, that are going to bring the cost of goods down. And I think it’s going to be a, you know, an interesting time in the next couple years to see how quickly they move on the plant side and on the microbe side.

Our personal view of that is that especially for the extremely rare cannabinoids, that the microbes and fermentation are just going to be really much more cost-effective than you could ever achieve on the plant. But I do think that overall, there’s going to be a place for both plant and fermentation-derived products in the space.

James West:   So is your intention, then, to list as a public company at some point in this process?

Jeff Ubersax: Well, we are venture-backed, so you know, everybody eventually wants to get to an exit. So you know, the big ways we think about that are to either, you know, have an acquisition occur, or going public. I, you know, think that we want to take our time on going public; there’s a whole lot of upside and downside to being a public company, and for now I think that, you know, given our focus on bringing cannabinoids to market through fermentation, we’re at a really, I think, prime phase right now to stay private for a while.

James West:   Okay. What was your pre-money valuation on your $11 million round?

Jeff Ubersax: So we’re not disclosing that right now, but you know, I think that the really exciting part about that 11 million is that is enough money to really allow us to build a state-of-the-art biotechnology laboratory and fermentation lab. I think that as you know, there are a lot of other companies getting into the space; we saw them talking last week at the Paradigm Conference, and you know, it’s important for any company entering the space to be well-equipped and well-suited to, you know, rapidly                                         engineer yeasts and other microbes to produce these new molecules. It’s not an easy task, and I think there is still risk, and but we feel like we’re really well positioned to be successful here.

James West:   Okay. How far will that 11 million take you? How long before you have to go back to the trough for another raise?

Jeff Ubersax: So we’re in the middle of a Series A right now, getting towards the end, and hope to have that, you know, you’ll hear from us soon, in the next couple months, about that closing. So we’re really exciting. I feel like, you know, we do need more capital to keep moving quickly, and are excited to have had a lot of success so far in talking to folks that are interested in investing. So it’s been really –

James West:   Sure. Well, that’s why I’m asking, because we’re actively investing, deploying capital into biosynthetic companies in the cannabis space. So for my audience, who are all investors, that’s why I ask these investor-oriented questions.

How much of the company did you give up for your $11 million?

Jeff Ubersax: So yeah, that’s something that I think we’re not disclosing at this point.

James West:   [laughter] Damn.

Jeff Ubersax: Yeah, no, I know.

James West:   Okay, well, great. Well, then, so I guess we’ll just keep an eye on the company, and we’ll wish you the best of luck.  It was great to have you on the show, and we’ll have you back soon. Anytime you have developments, please give us a call and we’ll get you on and hear about them.

Jeff Ubersax: Certainly will. Thanks a lot.

James West:   Okay, thanks very much, Jeff. Bye for now.

Jeff Ubersax: All right. Bye.

Original article: Demetrix Inc CEO on Potential of Cannabinoid Biosynthesis and Series A Financing

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