Willow Biosciences Inc (TSE:WLLW) (OTCQX:CANSF) is poised to be the first company to biosynthetically produce a rare cannabinoid compound known as cannabigerol, or CBG, according to analysts at ATB Capital Markets.
The Canadian biotechnology company announced earlier this week that it is kicking off a 500-litre pilot production run of CBG, a type of cannabinoid with non-psychoactive properties that initial research suggests could have anti-microbial and antioxidant functions.
“We view this announcement as positive as it is another step towards commercializing rare cannabinoids,” analyst David Kideckel wrote in a note this week. “Considering Willow’s large potential addressable market and its steady progress towards commercialization in 2021, we believe the company is trading at an attractive valuation.”
READ: Willow Biosciences kicks off pilot production run of high-purity CBG, a non-psychoactive cannabinoid compound
Willow has developed a proprietary process to manufacture the compound in commercial quantities.
ATB has a Speculative Buy rating on Willow’s shares and a 12-month price target of C$2.75.
Kideckel noted the potential opportunity associated with the commercialization of cannabinoids is “large,” saying that Willow has “come a long way” in improving the visibility over its path to commercialization in 2021.
"We view Willow to be a potential acquisition target for companies looking to develop cannabinoids through biosynthesis, given Willow’s scientific progress to date, its management’s expertise, and its strong intellectual property with multiple patent applications covering more than 200 novel genes to increase cannabinoid production,” Kideckel wrote.
“Most of Willow’s discovered genes are produced by the company’s proprietary genomic databases, which in our view, may lead to multiple additional discoveries and patents in 2020 and beyond, increasing the value of Willow’s intellectual property.”
Willow’s stock was trading 9.4% higher in Toronto on Thursday afternoon at C$0.58.
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