Cronos Group has entered into an agreement to acquire an 84,000 square foot GMP compliant fermentation and manufacturing facility in Winnipeg, Canadafrom Apotex Fermentation Inc. (“AFI”). "The state-of-the-art facility, which will operate as “Cronos Fermentation”, includes fully equipped laboratories covering microbiology, organic and analytical chemistry, quality control and method development as well as two large scale microbial fermentation production areas with combined production capacity of 102,000L, three downstream processing plants, and bulk product and packaging capabilities," the team with the company explains.
As previously announced, Cronos Group has entered into a partnership with Ginkgo Bioworks to produce cultured cannabinoids. "Research and development under this partnership is progressing, and as associated milestones are hit, this new facility is expected to provide us with the ability to produce cultured cannabinoids at commercial scale with high-quality and high-purity," they continue.
“This acquisition will provide the fermentation and manufacturing capabilities we need to capitalize on the work underway with Ginkgo once the milestones under that partnership are achieved,” said Mike Gorenstein, CEO of Cronos Group. “Together with Ginkgo, we are bringing innovation and the power of biological manufacturing to the cannabis industry, aiming to allow for cannabinoid production at large scale and with greater efficiency than is currently possible with traditional cultivation and extraction. We continue to be very excited about the opportunities ahead.”
According to the company, the acquisition is expected to close in the third quarter of 2019, subject to customary closing conditions. AFI is currently overseeing a wind-down of the facility, which is expected to continue through Fall 2019. During this time, Cronos Group will also begin aligning specifications for the equipment and manufacturing required for the production and downstream processing of cannabinoids. To support this work, Cronos Group expects a team of engineers, scientists, production and quality assurance personnel currently working at the facility to join Cronos Group.
Commercial production at the facility is subject to completion of the equipment alignment for cannabinoid based production, the receipt of the appropriate licenses from Health Canada for the production of cultured cannabinoids under the Cannabis Act (Canada) and the achievement of milestones under the Ginkgo partnership.
The Company intends to use existing cash on hand to fund the acquisition, which is not expected to be material to Cronos Group’s cash position.