Ep 311 – Is Cellular Agriculture Replacing Cannabis Cultivation?

ben chiarelli cellibre

Can we deconstruct cannabis in the lab, reduce costs, and unlock a myriad of new applications and benefits? Here to help us answer this is Benjamin Chiarelli of Cellibre. 

Learn more at https://www.cellibre.com 

Key Takeaways:

[00:51] An inside look at Cellibre, a cellular agriculture company that specializes in cannabis

[3:10] Ben’s background and how he came to start Cellibre

[8:07] How Cellibre “mimics” the cannabis plant to make cells that create specific isolates

[13:02] How price points will shift in the cannabis industry as cannabinoid biosynthesis grows

[21:20] The evolution of cellular agriculture and the obstacles it’s faced in commodity industries like cannabis

[30:29] Why CBG will be the first product available from cellular agriculture

[33:03] Where Cellibre fits into the cannabinoid market

[35:51] Why Ben agrees cannabis is “the new vanilla”

[41:40] Where Cellibre currently is in the capital-raising process

Click Here to Read Full Transcript

Matthew Kind: Hi. I'm Matthew Kind. Every Monday, I look for a fresh new episode where I'll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at cannainsider.com. That's cannainsider dot com. Now, here's your program. Can we deconstruct the cannabis plant in a lab, reduce cost and unlock a myriad of applications and benefits that we would not be able to do if we were working solely with the cannabis plant? Here to help us answer that question is Benjamin Chiarelli, CEO of Cellibre. Benjamin, welcome to CannaInsider.

Benjamin Chiarelli: Matt, a pleasure to be with you, my friend.

Matthew: Give us a sense of geography, where are we in the world today?

Benjamin: We're in sunny San Diego. It's a tough life we live here, 72 and sunny every day.

Matthew: Good. What is Cellibre in a high level?

Benjamin: At a high level, we're interestingly not a cannabis company, it just so happens that our first application is in the cannabis section for a whole host of reasons we can dig into today, if you'd like. What we are is a manufacturing technology company. We leverage what we believe to be the world's most sophisticated manufacturing technology. That's biology.

If we think about what biology is at a fundamental level, every single cell on the planet is basically a little mini-manufacturing facility. Every cell has little machines, and those machines are instructed by a cell's DNA code to turn nutrients into stuff. Flowers are production vehicles for beautiful fragrances, yeast is a production vehicle for ethanol, and therefore beer and wine. Up to the times, our bodies, when we get a viral infection, like COVID-19, actually manufactured these wonderful little medicines called antibodies.

Every cell on the planet is a manufacturing facility. Since we now have the ability to read biology, in other words, sequence DNA code to understand the blueprint of life, we are now transitioning to a phase where, instead of reading, we can actually start to write. We can treat cells as technology. In other words, swapping out their natural machinery and rewriting their DNA code to turn them into scalable, sustainable and economical manufacturing facilities for a limitless number of products, from textiles to medicines and beyond.

What we're doing at Cellibre, our first application of that is effectively removing the need for agriculture completely from the cannabis supply chain. We do that by taking the machinery and the DNA code from the cannabis plant, putting that into small microbes, like yeast. When we feed those the sugar water in a fermentation process, like any brewery that you've ever been in, instead of making beer, we make pure, natural cannabis extracts. More specifically, cannabinoid isolates.

Matthew: Can you share a little bit about your background and journey and how you got into this space and started Cellibre?

Benjamin: Sure. I'm a first generation American. My father came over in a boat from Italy to Pittsburgh, Pennsylvanian, [unintelligible [00:03:24] black and yellow. I love math and science, so I became an engineer, but I was terrible at it. For the safety of humanity, I went to business school. Then, I spent almost a decade on Wall Street covering life science companies and healthcare technology companies. Most recently, with J.P. Morgan's Healthcare Investment Banking group.

From Wall Street, I then actually got hired by one of my clients, who was trying to interestingly solve for the opioid epidemic, one of the things that brought me full circle back to the cannabis space. I was with that company for a little while. It was out here in San Diego. Then I met a guy by the name of Greg Lucier. Greg is arguably one of the best healthcare executives, period. He ran GE Healthcare for a little bit, and then switched over and ran a company called Invitrogen, which became Life Technologies, which he sold for $15 billion dollars to Thermo Fisher.

Now has a bunch of different ventures. I was fortunate enough to become friends with Greg. He's a great friend and a great mentor. He really helped me expand my network when I moved out here. One of the first introductions he made was to a guy named Doctor Craig Venter. Craig sequenced the first human genome, back in the late '90s, early 2000's.

Matthew: I've heard of him.

Benjamin: He announced that with Bill Clinton and the NIH. He co-funded a company here in town with a guy named Doctor Ham Smith. Ham won a little thing called the Nobel Prize back in 1976. The company's called Synthetic Genomics. It's most famous for its partnership with Exxon Mobil on alternative carbon-neutral fuels and energy. Basically, the premise for Synthetic Genomics is the same as Cellibre, just different application. That is reading DNA, writing the code of life, basically, to develop advantage manufacturing systems for products at scale.

I, after meeting Craig, ended up joining the executive team in Synthetic Genomics. I had the idea for Cellibre when I was there. Unfortunately, I could not talk to them into the application for a whole host of reasons strategically for them. I decided in late 2017 that this was too good an opportunity and too perfect a foundational application to build a company upon that I left to found Cellibre and really kicked off the process in early 2018. That's a little bit on me.

Matthew: Craig Venter, is he also involved in something life extension related with Peter Diamandis? Do I have that right?

Benjamin: Yes. Craig in involved in a bunch of different things. To be honest with you, I'm not sure where they all sit. I haven't talked to him in quite some time, but he had everything from Synthetic Genomics to the company you're thinking of as probably Human Longevity.

Matthew: Yes.

Benjamin: He is no longer at Human Longevity. That company was acquired and all the assets were acquired, but there were things that spawn out of that, a cancer therapeutic company called [unintelligible [00:06:26] and a few other things that are still in stealthy mode. Yes, he has had a bunch of different ventures in his illustrative career.

Matthew: You mentioned talking about cell and mechanics of it. When you try to really introduce somebody to this, you're on an escalator. If you have to tell them in one minute or less what you do, how do you break it down into something so simple anybody can understand?

Benjamin: It's a really tough one, right? That's been part of the difficulty of our journey because we're kind of melding the world's most sophisticated science with something that is currently federally illegal. Quite honestly, not very sophisticated, at large, from an industry perspective. The way I always break it down is a little bit like I broke it down for you earlier. That is, any time you think about biology, I want you to think about cells as little manufacturing facilities.

Picture in your mind a Ford assembly line. That Ford assembly line is taking inputs, which are just simple nutrients, in our case, sugar, and then slowly but surely, over the course of many steps, using machinery, which in cells, is an enzyme, to change that sugar into one product into the next product into the next product, until, eventually, you have your finished car at the end, which in our case, would be CBD or some other cannabinoid. I always say what we're doing is we're programming little mini-molecular manufacturing facilities that, in fermentation, will be able to make the products we program them to make.

Matthew: Part of what you're doing you describe as mimicking the plant. What do you mean when you say mimic, exactly?

Benjamin: When many people hear about our technology, they immediately think pharma and genetic modification, and synthetic is one that we get a lot. When you do this technology properly, we actually aren't manipulating anything other than the manufacturing facility. Think about that cell again as the manufacturing facility. What we make, the product that comes out the back end, is very different than what the plant makes.

The plant is very complex, and actually very interesting, genetically and biologically. When you do an extract from a plant, what you end up with is a collection of 400 different chemicals in varying concentrations, sitting in a lipid or a plant fat, the oil, as it's referred to. What we're saying is, that's really hard to scale. That's really hard to develop products around. It's really hard to get the same experience every time. I think any cannabis user would tell you that's true. It gets even more true when you start talking about new form factors, like edibles or vapes or patches or pills.

Our view was, "Wait a second, what if we could, instead of having products be defined by the plant, have them actually be defined by the brand or by the innovator?" While our technology will make isolates, what we're able to do is to design each cell to make a specific isolate. One cell will make CBD, so we'll have one fermentation tank that makes CBD, but we will have a refrigerator full of these mini cell factories, each of which can make its own component of the plant. What that will allow for is basically for an innovator to say, "Hey, I just want a one to one CBD to CBN ratio of ingredient in my gummy. Can we make that?" The answer is yes, we will scale each one of those. The cost will be significantly less and basically the same for each one and allow them to have the exact same combination of natural cannabinoid in each one of their gummies.

If someone else came to us and said, "Hey, Ben, we have a really interesting cultivar say, like a Doug's Varin, which is very high in THCV concentration, a really interesting cultivar. The problem is we can't scale this, we can't mimic this at scale." What we can do is we can actually take a look at that cultivar and say, what does it look like chemically? What is the cannabinoid concentration? What is the terpene profile or the flavonoid profile? Then we could take each one of those individual components and scale them and then mix them together in that exact concentration so that your Coca Cola is the same in China, as it is in Texas, as it is in Portugal.

Then as a brand, you're able to take that specific experience and make it the same. For us, where it becomes really interesting is we tend to believe that people are underestimating the market opportunity for cannabinoid-based products. The reason that I say that is they're thinking about these products in the context of the traditional ag and extraction market opportunity.

There you're limited by a number of factors. One of them we already talked about, which is consistency. The second is cost. Not everybody can afford a $75 bottle of CBD. Technologies like ours will drop that dramatically, thus, opening up access to quite honestly the patients and customers that need these things the most. The next one is the flavor profile of cannabis is not one that is appealing to everybody.

There's a reason that Jewel had so much momentum and we forget the controversy side of the Jewel thesis. There's a reason they had so much success and that's because everybody that likes sucking on tobacco. People would much rather consume something that tastes like strawberries or blueberries. I think you're going to see the same thing in cannabis. That's the reason edibles as an example are very interesting and you see a lot of people trying to remove the "hemp taste".

With our technology, we would be able to take these really interesting mixtures that you find naturally in these plants, scale them, but then combine them with different terpene profiles or different flavonoid profiles, and honestly, make the product development process almost infinite. People that wouldn't have tried something that tastes like pine trees before may be interested in trying a product that, for instance, tastes like peaches. We think we actually open up that opportunity quite a bit. Did that answer the question?

Matthew: Yes. You mentioned price points in your example, bringing up price points, let's say, a one to one CBD ratio to THC. Can you give us a sense of what price points you think are realistic so we can get an idea?

Benjamin: Yes, so it's very interesting in the market right now. If you think about ag and extraction, you're seeing a lot of CBD, for instance, flooding certain markets for 650 a kilo, 750 a kilo for pure isolate. They're not making money on that. That's loss-making. We think the actual steady state pricing from agriculture for cannabinoids and we bench everything to CBD because we think CBD and THC are the ones that you're going to be able to get from the plant at scale. It would take a long time to breed plants to make some of these minor cannabinoids.

We try and benchmark everything to those two. If you want to look at the best processors in the world, you're probably looking at $400 to $700 a kilo for your broad-spectrum extracts, and then another 1,000 to 1,500 in downstream processing to get to your isolate forms. Those are the metrics that we're trying to compete with because on price we believe if we can compete with that, and then remove the need for three to six-month growth cycles, remove pesticides and heavy metals from the equation because we're in pharmaceutical-grade type production facilities where we don't have those issues.

Obviously, the allowing for defining your product rather than having the plant define it for you. All of those outweigh the benefits of plant-derived. That's the basis on which we look at it. As far as where our technology goes, we are extremely confident that we get sub $1,000 per kilogram. I'm not just talking CBD, that'll be the price point to think about for any of the cannabinoids, including the minors because we are not defined by the plant or how the machinery in the plant works or how the plant uses its nutrients, we're actually defining that for our production facility.

Our cost of goods for CBD will be the same as CBN, will be the same as CBDV within a range, but not a material range when it comes down to it because those aren't really the driving factors and economics of this technology. You should be thinking about sub $1,000 a kilogram. Given what we've seen in the lab here early days, we are super confident that we can get that below $500.

This is not guidance in any way, shape or form but it is-- The next statement that I'm going to make is something that people should keep in their back of their mind whether they're farmers figuring out their strategy or their product companies thinking about what can I really bring to market and how should I be thinking about my own internal R&D? If you were to scale technologies like ours and hit metrics that are well within the means of hitting, you could see these molecules be produced at a cost of goods nearing $100 per kilogram, which obviously is a complete game-changer as it relates to this supply chain.

Matthew: That would be a huge game-changer and would open up a huge number of products that are right now too expensive. You mentioned $70 CBD for someone that's on a smaller income is just a nonstarter. What other kinds of products would be opened up when the price points come down that low?

Benjamin: If we're honest with ourselves, and this is one of the things that drives me crazy about the industry. How many times on LinkedIn, Matt, do you see a post from one of these cannabis websites that says, "CB, put a random letter in there, new cannabinoid discovered is the next big thing in cannabis."

Matthew: Right.

Benjamin: Have we seen 1,000 of those [laughs] in the past three years? I think if we're honest with each other, we have no idea. While this plant has been probably the most studied plant in the history of mankind, the reality is not all science and not all study is valid. A lot of the studies in science that have been reported on this plant are just not well done. They really don't tell you much. They directionally tell you where you should be looking but there's nothing out there that's super definitive.

I would say first and foremost, what our technology really is going to allow us to do is to understand this plant at a deeper level and understand all of its components individually, but also start to understand them in combination. What I would say is, at a high level, I am very confident in saying they're anti-inflammatory properties in cannabinoids that are very interesting in a whole host of different applications. Whether that be wellness, whether that be recovery, whether that be cosmetics, there are a bunch of different product categories you can be thinking about there.

I think the data in sleep is very, very interesting. That's a massive category. Then obviously, there's the intoxicating chemicals, a lot of my cohorts and this is one of the things that makes it difficult to Cellibre is that we want a lot of people. We think THC production is going to be important. We think that that's a very big market. I think everybody is pretty much aligned that you're going to see some cannibalization of these traditional markets in the recreational whether that be alcohol or cigarettes, I think you're going to see some cannibalization there with these products as well. Then I think the big thing is form factor. Not everybody wants to smoke something into their lungs.

When you start thinking about edibles as an example, I'm sure that all of your listeners and I'm sure you yourself know people who have taken edibles and from the same package, get an experience one day that is wonderful and the next day from the same package get something that's anxiety-inducing. That's because your body metabolizes things very differently based on the method of consumption.

Taking something into the stomach whereas an example, the enzymes in your stomach are converting THC Delta-9 into a chemical that is multiples more potent depending on your specific metabolism. That's hard to deal with when you're dealing with a plant that makes 400 chemicals simultaneously and a different concentrations. I think when we think about this, from a product category perspective, we think all of the products that exist today will still exist, but we think there's an ability to open that up with different form factors, new formulations, and also new combinations of cannabinoids with things that are not found in the plant, other natural flavors, other natural terpenes. I think it's almost limitless. We hear some really interesting ideas from people.

I'll tell you, as an example, we talked to a Fortune 500 company that it claims, and I haven't seen the actual data, but in talking to them about potential partnerships down the road once we're ready to go, they said their cosmetic group actually has a cannabinoid formulation that tightens the skin and compete with Botox. Who the heck knows what the applications are? What I would say is pump the brakes as an industry.

Don't try and make a quick buck, play the long game. We do not need to make a bunch of claims that we haven't substantiated yet. There's a lot of good found within this plant. There's a lot of opportunity to go around for everybody, and let's just take our time and study it because I think we owe that to our patients and our consumers.

 Matthew: Cellular agriculture has been around for a number of years, and we've heard things about it, and it pops on the radar of last a while you're deep in the weeds here. How come it hasn't come very far until now? Nothing's happened at scale yet, and we keep on hearing it's right around the corner. What have people that have- or businesses that have tried this in the past knocked on right to get the scale correct?

Benjamin: Are you talking about specifically in cannabinoid production, Matt?

 Matthew: Yes.

Benjamin: Before we dive into that, I think it's important for people to know that this technology is not only existed but it's been commercial, and more than likely, by the way, you've consumed something that's been made this way. I'll give you an example. Our chief scientific officer at Cellibre developed the platform that was licensed to a big ingredient company to make DHA which is one half of what's known as fish oil.

Many people think when I'm taking my fish oil tablet, I'm taking this oil that was derived from a fish. The reality is, it's actually from a VAT somewhere in the middle of Iowa. Many different supplements, many vitamins have been made using this technology. Actually, 50% of the world's medicines are made using this technology today, insulin being an example that I use because everybody has someone in their life that is diabetic and has taken insulin before.

Believe it or not, we used to get insulin from a pig pancreas, we used to actually extract it from the pig pancreas until some smart scientists said, "Well, wait a second, pigs aren't really scalable for medicine, there's got to be a better way", and they moved that production to fermentation. What I would say is this technology has been around for a long time, and it has been used to actually commercialize billions of dollars worth of products.

The big flaw in many of the applications especially in the early days of this science, early to mid-2000s, biofuels is the one that comes to my mind. First is that it is really hard to make this work in commodity industries. When we were doing DHA production as an example, we had to get our cost of goods into the 10s of dollars. That's really hard to do.

When you're doing this in fuel, you have to take a $400 a ton input and turn it into a $600 a ton output.

Those things are really hard to do given the economics. We don't have that economic constraint with cannabinoids. It's not because it's some moleculus molecule that can't be found anywhere on Earth, quite the opposite. You could grow cannabis on every single square inch of the planet if you really chose to, and bred your plants properly, of course, or built greenhouses.

The nature of the plant given that it makes 400 chemicals simultaneously, and all of those chemicals look alike, and they're in a lipid form factor when you extract them, makes that manufacturing process really difficult, and provides that floor from an economic perspective. It's the reason that we believe this is the perfect foundational app for what we're building at Cellibre which is a broader manufacturing technology company.

On cannabinoids specifically, yes, you have been hearing about this for quite some time. There are multiple reasons it hasn't come to market yet. The first is, if you've ever seen Moore's law in computing, biology is actually improving at a much more rapid pace. I would encourage you to Google Moore's Law versus genomic sequencing costs. That's actually a really good graph.

It'll show you how much faster genome sequencing has come down versus Moore's law since my old colleague Craig sequenced the first human genome. What that tells us is that biology is figuring all of this out as part compute and part discovery on the biological side. I will tell you that the tools and capabilities required to actually pull off this science have come a long way in the last decade, and quite frankly, a long way in the last five years.

Our ability to actually execute on the science has improved dramatically since folks like my friend Jason [unintelligible [00:25:43] or the or the guys at Hyacinth, who were early, early, early in the idea of moving cannabinoid production to fermentation since they got started. That's number one. Number two, scaling biology is not trivial. When you're in a lab, you can control almost every variable.

I can control the temperatures that my cells are growing at, I can control the pH levels, I can control oxygen transfer rates, how much oxygen is getting into those fermentations by supplementing it. You don't have that luxury when you move to 10,000-liter or 100,000-liter fermentation tanks. The approach that we take here, which may be different than a lot of people, is this idea of scale down. The idea that we do not run an experiment in our lab that cannot be replicated at scale.

We're not trying to write a science paper, we're not trying to show data to get investor dollars, we are doing things to actually drive a commercial solution. I think a lot of times when people have less experience or have not scaled the technology before, they tend to get very, very excited about preliminary data in the lab, not recognizing that that does not necessarily translate to scale. Your point is a valid one. When people said, "Well, then, how are you guys going to make this work when these other people have been trying?"

The phrase I use is that people have been telling the industry and their partners that they would be commercial in 18 months for about six years now. I think we are now at the point from a technology perspective, but also from a player's perspective, who's actually working on this science that you're going to see these technologies start to come on commercially.

Some people saying as early as later this year, but my guess would be 2021, 2022 timeframe. There are a couple of organizations out there other than obviously, my bias towards Cellibre and the team here that I think are just tremendous at this science doing a great job and we'll 100% get there.

 Matthew: You're saying we're in an exponential leap mode in terms of where the genetic sequencing is similar to Moore's law, it's just the hockey stick is going upwards right now.

Benjamin: Yes, just from a capabilities perspective. Let me give you one example of that. At Cellibre, we take a little bit of a different approach. If you talk to anybody else doing this science, they'll probably tell you that they're programming baker's yeast to do this. That's the Amyris' of the world, probably Ginkgo, Demetrix is using baker's yeast. We don't start there, we flip that whole thing on its head and we say, can we find an organism that already does some of the things that we want to do?

The analogy that I use is using baker's yeast to make cannabinoids is like using the Ford factory to make iPhones. Could you do it? Sure, but you got to swap out a lot of machines, and rewrite a lot of programming, and move things around on the floor, and it's just a lot of work. What we do is we go find the Samsung Galaxy factory, and say, "Okay, let's use this to make iPhones. We're closer to the endpoint." That may seem simple and obvious.

The problem is we're dealing with little manufacturing facilities that are actually living critters. When you change them, nature has a tendency to turn around and kick you in the shin. When you do that, you have to first be able to sequence that organism very precisely and define your blueprint. The sequencing costs have gone from tens of thousands or hundreds of thousands of dollars down to hundreds of dollars. We can now bring in 40 cells sequence small and it's really not a big expense for us.

If we were to do that 10 years ago, we would have had to do a complete fundraise just to sequence genomes of the little cell factories we were trying to get the blueprint for. That's one example. The other example is there are tools out there that have been discovered just in the last five years that allow us to rewrite the DNA code, get the code in there that we need to get in there, even down to printing DNA. How do we make DNA? How do we make DNA to actually instruct these cells, it's not a computer program.

We're not writing it in some digital world. DNA the code of life is actually a physical part that we need to put into these cell factories. The cost of making that DNA has come down precipitously. It's a combination of all of these things that are enabling this technology at large to really take hold and actually become a reality.

 Matthew: You'd mentioned to me before that you think CBG is going to be one of the big products that first come out of the lab. Can you explain why you think that is?

Benjamin: I wouldn't make the claim that I think it's going to be a big product, I would say, I have no idea. Because we're getting some interesting data on CBG but I would never want to sell a product that we haven't studied for safety, for toxicity. It's very different than consuming CBG in an oil with a bunch of other chemicals where CBG is not a major player. When you're taking it in isolate form and milligram quantities or larger, we haven't done those studies yet.

We don't know what the short-term impact is, what the long-term impact is, and most importantly, we don't know what the efficacy is. What is CBG actually doing for you? There is some interesting stuff out there, but we haven't studied it nearly enough to really know. I will tell you though that it will be the first product available from cellular agriculture, and the reason for that is, we, by definition, have to make CGB first. CBG is the mother cannabinoid. It's either CBG or CBGV.

If you wanted to make the Vs. You have to make that first in your chassis organism or your first cell factory because you can't make CBD until you make CBG. We will have a cell that is able to make that product first. When we model or when we talk to people, we're not saying that we're going to make big quantities or sell big quantities of that. It's a high revenue, high margin product if we can. I think the selling price that I've seen in the market place for plant-derive CBG isolated somewhere in the $25,000 to $30,000 a kilo range right now.

Tough to get from a plant but there's a couple of folks out there that do it really well but again, I just don't know what the market opportunity is there. The big conversations that we have had around our CBG are really in the cosmetics realm where I personally as an operator feel a little bit more comfortable when you're not ingesting things and it becomes more of a topical application from a safety perspective. The folks that we're talking to are doing those studies and looking at it very heavily.

I would say some of our competitors and colleagues are very close diverse with what their first cannabinoid product will be. If you understand the biochemistry you know that all of them are going to make CBG first because they have to.

 Matthew: That makes sense. How does Cellibre make money in this new ecosystem that's evolving rapidly?

Benjamin: I think first and foremost, when you're building a business you should know what you're good at and more importantly know what you're not good at. What we are really, really good at Cellibre is engineering cells to be manufacturing facilities. That's our bread and butter. It's what we do. People often say, "Well, Ben, will you make your own products and build your own brands?" I find brand building to be more binary than biotech. I have no idea why the Kardashians sell a product. To me, I can never-- One plus one will just never equal two there for me. I won't get it.

Clearly, I'm in the minority but brand building is really, really hard. Ultimately, our business model is to let people who build brands, let pharmaceutical companies who develop drugs, let animal health companies who understand those supply chains those markets and those needs both in companion animal and livestock animal tell us, "Hey, Ben, here's our product, and here's what we need from you with scale." Basically becoming an ingredient or API which stands for Active Pharmaceutical Ingredient provider for those businesses.

I think number one for us as a technology company that alleviates the binary risk. It alleviates the binary risk of taking a drug through the clinic. It alleviates the binary risk of trying to build a brand and get distribution. It allows us to take our technology and put a lot of shots on goal so that we ultimately can grow the portfolio of partners that we have. That's important for this technology because this technology more than any other is all about scale and economies of scale more specifically.

The bigger your production facility and the more you make per dollar of capital investment, the more product you can make per dollar of capital investment, the better your cost of goods gets. At small scale, really hard to make a business out of fermenting natural products but once you get up to 5,000, 10,000, 50,000, 100,000 leader fermentation tanks, the cost of goods drops precipitously and the opportunity becomes massive.

For us, people always send folks my way from small [unintelligible [00:35:28] companies or small cosmetic companies, and I'm always happy to talk to them, there are some great ones out there. For us, we talk mainly the Fortune 200 companies, large MSOs, large Canadian operators, and a couple of countries actually that really want to get into the scale game because for us that's what we need to be truly successful on drive margin.

 Matthew: Now, you turn me on to an article that's called Cannabis the New Vanilla. Can you talk about what that means and what you think about it?

Benjamin: Absolutely. For those looking that was written by an internet friend of mine Jim with the Thai Cannabis Corporation. If you look up Thai Cannabis Corporation and you look for Cannabis is the New Vanilla. It's a great piece by Jim, and I recommend it highly. I send that to people all the time to think about ingredients. Jim, obviously, has a bias and has an agenda. He is part of the group that is trying to define what the cannabis industry in Thailand will look like. He also does a lot of fantastic work around small cannabis in emerging markets in small countries.

He has a really interesting thesis around that from a plant perspective. If we think about where the plant came from, it came from Asia and the Middle East. It wasn't native to North America and actually most of the North American cannabis is not that interesting. He wrote that piece really in the context of, "Hey, as farmers, what should we be worried about and how should we be thinking about our businesses and our commercialization as new and novel technologies come into the space?"

The reason vanilla is such an interesting example is that it checks almost every box that cannabis does. It's very expensive. It's a very high-value product. It's very complex. Vanilla is made up of over 170 different chemicals versus cannabis which is over 400. Vanilla is driven by a couple of minor chemicals that are in that mix of 170. The biggest discovery of which was something called vanillin which is the chemical that was believed to encapsulate the vast majority of the flavor and the fragrance from that vanilla bean.

We chemically synthesize vanillin today and that's what you see in your artificial vanillas that are out there. Then the spice company McCormick said, 'Well, wait a second, vanilla and [unintelligible [00:38:06] has been out really, let's study this more further." They broke down the vanilla into its individual components and said, "What's really driving the essence of vanilla." What they found was, it wasn't 170, it was more like 20 or 30 chemicals that if you were able to mimic that collection of those chemicals, you could literally capture the same exact essence of vanilla.

I think we're going to end up with a similar thing here. You hear a lot about this idea of the entourage effect, and it is statistical and scientific just gibberish to say 400 chemicals combined in various concentrations that are never the same or some magic potion for a certain ailment. It is, however, completely logical and has been scientifically proven to an extent that these cannabinoids do act in consult with one another and do have synergistic effects. In pharma and biotech, this is often referred to sometimes as what they call combination therapy.

One medicine on its own has a certain amount of efficacy, another medicine on its own has a certain amount of efficacy. When you use those two medicines in combination with one another, they actually have synergy and give you additional benefits or different benefits. I think we are ultimately going to find that 400 chemicals probably isn't the answer.

For many applications in isolate or one cannabinoid is not going to be the answer, but it's not going to be hundreds in consult which you're going to find is it's a handful to 10s or 20s, they're likely going to drive the efficacy, drive the safety, and drive the experience around that.

I think what Jim was also saying with that piece was that there has never been a wealthy farmer. If you think about where vanilla comes from. It's coming from very poor countries in very poor communities and nobody is getting rich growing the vanilla bean. The people that are getting rich are further up the supply chain, building brands, importing it, all those good things. I think it was really a warning to say, "Hey, guys, pump the brakes. While we're all calling this the green rush and everybody is very excited, we need to be thinking about the supply chain from every single angle so we can better position ourselves as farmers to receive as much of the benefit as possible on the back end."

I think the other thing that I would add there is often when I get into these conversations at this point, Matt, people say, "Well, wait a second, Ben, why do we even need the plant? Aren't you just going to replace the plant?" I want to be really clear that I don't think that ever happens. I think that the market for flour and the market for plant-derived extracts whether that be isolate, broad-spectrum, full-spectrum in all the form factors crumble or desolate.

I think those markets are always going to be there. I think they're going to grow nicely. I think they will be multiple billion-dollar if not 10s of billions of dollars in market. What I do think, however, though, is that technologies like ours grow the pie and I think there are certain applications whether it be pharma or cosmetics or edibles where our technology is just a better mousetrap than using the plant as the production facility.

I actually don't think there's much competition between us and agriculture. I think it's actually a really synergistic relationship for brands and innovators and to really take what the plant does well and just reinvent it into new product categories and formulations.

 Matthew: Where is Cellibre right now in terms of raising capital?

Benjamin: Our first external capital is funded by founders up into our first external capital raise which was- we closed in June of 2019. Our investors there were our friends Matt Hawkins, Cody Sanchez, and Dough that at Entourage Effect Capital. Also, Tamara at Flatiron Venture Partners out of New York now out of Colorado. They just moved from New York City to Colorado, and in Dominguez from a spin-out from a hedge fund called Schonfeld called Delta Emerald. Great investors, great partners, wonderful folks. We have some other interesting cannabis names invested in us as well CB1, Architas, Bravos Capital, and a few other names that folks would know.

Also, I think it's important especially in cannabis for founders, where they can, at whatever level they can, to invest alongside those investors, just given how difficult it is. I think it's especially true for us. We have more than enough runway right now but we do think that it's prudent to put a little bit more capital on the balance sheet, and wouldn't want to raise money in these beautiful conditions of global pandemic election year and protests in the street.

We were originally going to raise a Series A this year, but we're being a little bit pragmatic, so I think what we're going to ultimately end up doing is putting a bridge facility in place really an amend and extend on our initial convertible note. That way, give us an extra 12 to 15 months of runway beyond the runway that we already have which should allow us to chop some pretty significantly wood on the scientific side on the partnership side while skating past the current macro-environment to put us in a better position to raise an official preferred price grounds in the call it Q1, Q2 2021 timeframe.

 Matthew: Well, Ben, I have some personal development questions for you to help listeners get a better sense of who you are as a person. With that, is there a book that's had a big impact on your life or your way of thinking that you'd like to share?

Benjamin: Oh, geez. I'm going to put reader in air quotes even though we're on an interview here and not on TV. I find a bunch of different topics really fascinating. I think one of the authors that I got introduced to really early on that has changed my perspectives on a lot of things is a guy named Thomas Sowell. He's considered in many circles to be a conservative thought leader, but he's very interesting in the way he explains economics and explains really difficult topics that are apt to the day like race and economic inequality. He actually started his career as a full-blown Marxist, and then after his education and life experiences moved over to a different way of thinking about economics.

I would say Thomas Sowell is probably my favorite author if I was to define one there, but as a startup founder, I would say there's a couple of really interesting books I would recommend. One is called The Power of Habit. That's a really good book on understanding how human beings when put into a circle of habit actually become much more efficient in how they operate.

I think Peter Thiel's book Zero to One is an excellent one for people to take a look at and learn from. Then one more from business perspective, Safi wrote a book called Loonshots, L-O-O-N shots. It is a fantastic book on fostering innovation with a lot of really good stories on how companies think good, bad, or the ugly about innovation. Then my own personal favorite is a book I wanted to write myself, and I would have written it in a completely different way than he did but Mark Manson, The Subtle Art of Not Giving an F, I think is another one that I would recommend but I would also recommend thinking about that in a long, long way. It's a bit of a psychosis but I really don't care at all what other people think about me, you know who you are personally and who you are as a human being.

Don't be afraid to speak your mind, don't be afraid to have opinions that are different than the mob. If I didn't, I would have never had the wherewithal to found Cellibre quite frankly. I'm counterculture in the counterculture, I'm a former banker/biotech pharma guy getting into the cannabis space. I don't have a safe space anywhere if you want to think about it that way. Those are some of the books and authors that I find interesting at least at this moment in time.

 Matthew: What's the most interesting thing going on in your field besides what you're doing?

Benjamin: In the field of cellular agriculture and just using biology and manufacturing technology, you mean?

 Matthew: Sure or even more broadly scientific and scientifically, if you'd like.

Benjamin: I think that what's captured everybody's hearts and minds right now is COVID-19. I actually jokingly with my investors told them we were going to do a press release that said Cellibre is not working on anything COVID-19 related because I think we're the only company that didn't make a press release. For me, the most interesting things are those that are a long game where you’re fundamentally changing how people think about things. To keep it in our own world of biology, there are two that are super interesting that people probably don't know biology is going to impact. The first is computing. I would encourage everybody to start read about Biocomputing and Biostorage.

For instance, a company called Twist Biosciences has a partnership with Microsoft, where they're looking to move data storage into DNA. If you think about DNA, our DNA code three billion base pairs stores all of the information that encodes how our crazy bodies and minds work. You can pack an extraordinary amount of information into DNA and then extract that information by sequencing the DNA.

The entire Smithsonian archives could literally fit inside an 8 x 10 office of DNA. We can really think about things like data storage and computing power very, very differently if we start seeing how nature does its "compute". That's one area that's really interesting. The other area that's super interesting that, quite frankly, I don't think it ever works. I keep challenging people on this and I'm waiting for somebody to prove me wrong because it's my favorite application in all of food technology, a space that I really find interesting.

That is this idea of cultured meat, not plant-based meat-like beyond meat or impossible but literally making the same exact Wagyu beef, or the same exact tuna, or the same exact chicken that you would get through traditional an animal agriculture, but doing it via fermentation. Effectively fermenting the same exact meat products that we have today in fish products that we have today but without the land use, without the implications of animal farming and the footprint that goes along with those and without, obviously, the cruelty.

I think that is one of the coolest things going on right now. There's a company called Memphis Meats that's leading the way there on the beef side. There's actually a company here in San Diego called BlueNalu who is doing the same thing and kind of fish. I'll be honest, I don't see how the economics ever work there. I can't model it myself to drive it down into dollars per pound, where you need to be to compete in those commodity markets.

It comes full circle back to our original conversation of why these technologies have failed in the past. Gosh, if that one could work and we could secure supply chains and start democratizing supply chains for protein production, I think that would just be awesome technology for the world at large and for geographies and certain populations that quite frankly, can't afford those nutrient-dense products today.

 Matthew: You know with the popularity of the ketogenic diet, it has a lot of people thinking about how they do feed their cells. Is it with glucose or I guess ketones or ATP? I know just enough to be dangerous here but tell me how do you think about just eating food on your own? Are you religious in terms of what you eat and how you eat it because you know how your cells are, the fuel it's getting? How do you think about it?

Benjamin: I'm much worse than I should be, brother. In my defense, I was born and raised in Pittsburgh where we put french fries on our sandwiches.

 Matthew: There is some weird-- There's some long sandwich there that I've seen a documentary about or something. What's that called again?

Benjamin: As you should, by the way. It's called Primanti Brothers. Actually, the reason it came into existence was because of the steel mills. Those guys used to only get 15-minute lunch breaks in the sandwich shop down the road. Primanti Brothers had a sandwich coleslaw and french fries and what they'd have is half of everything would get eaten. One day, one of the folks in the kitchen was like, "Hey, why don't we just slap all this together? So you get your Philly cheesesteak with your coleslaw--" It's a vinegar-based slaw, not a mayo-based slaw, "and then french fries all between the bread and then people were able to eat it all because they just didn't have time to be picking around the plate."

It became this late-night cult following. It was, I think, on the first or second episodes of diners, drive-ins and dives. Another funny thing about Pittsburgh, we have a french fry problem, I guess. If you go to Pittsburgh and order a salad, there is a very high probability that there will be french fries on your salad. First, I would suggest everybody try it but a really funny story is one of my best friends, he and his wife moved to New York City and they lived in a very fancy part of New York City and they went out to a restaurant. She ordered a salad and when the salad came to the table, it didn't have french fries on it and they're with their bushy New York, sophisticated, elite crowd.

She looked at the waiter and she was like, "Excuse me, where my french fries?" He was like, "Oh, I'm sorry, I didn't know you ordered french fries and we actually don't even have them on the menu." She said, "No, for my salad." Both of them then just stared at each other baffled because she was just confused that people made salads without french fries. That's Pittsburgh for you. I would say I'm much less good about diet than I probably could be or should be.

The one thing I do do though is I do not eat during the day. This intermittent fasting thing. I didn't necessarily do it because it was trendy or healthy for me. I did it because I'm just a crazy person and I find myself throughout the day not eating and the next thing I know it's time to go home. I actually only consume black coffee during the day and then I eat between, I would call it [5:00] PM and at [9:00] PM every night. That's the one weird diet thing I have [crosstalk]

 Matthew: Do you put butter in the coffee or anything or it's just totally black?

Benjamin: No, totally black. Don't be mucking up my caffeine with that other stuff.

 Matthew: You're like a camel or some mutant. I think there's a cosmic balance because I'm eating five meals a day. They're small ones.

Benjamin: Here's the thing about diet, is that, and my feed is a bunch of my friends who are in biotech and are in food tech, quite frankly, are a lot of plant-based folks, a lot of vegan folks and that mob will tend to yell at you and tell you how much more healthy vegan is than meat and yada, yada, yada. What I always tell them is, "You have no idea because every single person is very, very different." It's a lot like cannabinoids, my friend. How one person reacts to THC is very different than another person. It's the same with medicines. Some people can handle opioids, other people cannot handle it. Diet is very much the same. I think it's an iterative process.

We don't know enough yet to really define it for you to find what makes you feel better, what makes you have more energy, what makes you feel more healthy. I think anybody making a blanket statement on anything is one thing and one thing only and that's wrong, but that is especially true when it comes to diet. I think diet is just very individual.

 Matthew: Agreed. Well, Ben, as we close, can you tell accredited investors how to get on any mailing list or anything and how potential customers or clients might be able to reach out to you if they want to know more about Cellibre?

Benjamin: Yes, absolutely. I appreciate that opportunity. We do have a, "Contact Me" on our website, it's www.cellibre.com. Cellibre is spelled C-E-L-L-I-B-R-E. As far as investors go or partners go, you can always look me up on LinkedIn. That's probably the best way to reach me. It's Ben, B-E-N, Chiarelli, C-H-I-A-R-E-L-L-I. I'm super active on LinkedIn. I do my best not to talk my own book. I actually get yelled at by my investors sometimes for not talking enough about Cellibre's business, but I just find that uninteresting. I like to get involved in more topics and it's done us a lot of good from a relationship perspective, where we're not out as a billboard and a sales team the whole time. We're actually trying to add value to conversations.

I would say, look me up on LinkedIn, reach out anytime. Even if it's not for partnerships or even if it's not for investment, we're always happy to be helpful to our friends on the agricultural side, to investors who are just looking for a broader network scientifically, both in cannabis and in biotech. I think it's better to just be helpful first and expect nothing in return. That's really for me what life is all about and how you build real lasting relationships.

 Matthew: This is a fascinating area you're in. Good luck to you with all you have going on and keep us posted.

Benjamin: All right, my friend. Well, thank you so much for having me. A pleasure as always, and if I can ever be helpful to you in any way beyond this, please do let us know.

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