From cannabis to cosmetics, Algae Dynamics (ADYNF) has several ways to win

[Canada] Calling a spade a spade, there’s nothing sexy or exciting about algae… unless you’re an investor, and unless you’ve been monitoring the ongoing exploration of algae as a source of food, fuel, decontamination, and more. As it turns out, this occasionally-annoying and seemingly-useless microscopic plant may well be the foundation for a variety of products that end up saving the world from its many ails. And an up-and-coming small cap company called Algae Dynamics Corp. (OTCMKTS:ADYNF) wouldn’t want it any other way.

From fertilizer to fish food, and from biofuels to beauty products, and even from environmental-scrubbing to edibles, algae is proving to be an amazing all-purpose foundation for the creation of several goods – and services – the human race increasingly needs.

And new utility is discovered or improved all the time. Just this week, Cargill proclaimed that algae was going to play a big role in fish-feed subsidiary Ewos’ future. Scientists at the Pacific Northwest National Laboratory’s Marine Sciences Laboratory took a huge stride in turning algae into biofuel; its LEAPS (Laboratory Environmental Algae Pond Simulator) technology simulates climates and seasons around the world inside glass cylinder photobioreactors, inducing very rapid growth of microalgae. It matters, because the faster algae grows, the more it can be converted into something else we need.

Small cap Algae Dynamics is already riding the wave of this megatrend, but it’s doing so with a game-changing technology called BioSilo.

BioSilo is a way of growing algae quickly and effectively. It’s a blend of an open-pond system and a photobioreactor, which is a light-driven approach to growing algae. Think of it as a “best of both worlds” approach. It lowers the typical cost of algae farming, and the modular design makes it easy to maintain.

The company could do a lot with its science, but it’s focusing on two specific algae-based products first – Chlorella, and Omega-3.

Chlorella is a type of microalgae that can be processed into a consumable powder by drying it until it takes a powder form, similar to coffee. Chlorella is rich in minerals, prebiotics, vitamins, and other nutritional substances. It can be added to a baked goods and a number of other products, or taken as a supplement on its own. Chlorella is used in over 1,000 products in the food and beverage markets. Algae Dynamics estimates the global Chlorella market was $210.3 million in 2014 and is expected to reach $265.5 million in 2018.

Despite a market for Chlorella in North America, there are no commercial North American producers of it.

Due to its health benefits, Omega-3 can be added to a very wide range of products. Consumers are increasingly aware of these benefits too, leading to substantial growth in the industry; health supplements comprise the signal largest use of Omega-3 oils in North America. The company estimates that the global market for Omega-3 oils was $14.5 billion in 2013 and is expected to reach $21.7 billion by 2019, a compound annual growth rate 7.0%.

Algae-derived Omega-3 is created by extracting the oil from the algae biomass, then separating the Omega-3 fatty acids (oil) from the algae oil.

As it turns out, however, much of the know-how used in the algae harvesting technology can be utilized in the extraction of the good stuff in cannabis. So, in December of last year, Algae Dynamics announced it was getting into that game as well.

The details of the company’s foray into the new arena aren’t yet available, but Algae Dynamics did say it was expanding its research and development work with existing and new Canadian university relationships to bring the latest technology and science to develop future products. It also confirmed it was submitting an application to become a producer of medical marijuana under Canada’s ACMPR (Access to Cannabis for Medical Purposes Regulations) protocol, which will ultimately allow it to sell products derived from cannabinoids. At stake is a market that’s expected to be worth $10 billion by 2018 as its legalization and normalization trains continue to chug along.

ADYNF may be an off-the-radar small cap right now, but the company’s got a lot of initiatives underway that will clearly bear fruit. It will be interesting to see where Algae Dynamics will be a year from now, though interested investors should know that other buyers aren’t likely to be waiting around on the sidelines. They’re already stepping into positions, and for understandable reasons.

 

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