Cyanotech is buying Cellana’s six-acre production and research facility, known as the Kona Demonstration Facility. Photo: courtesy of

San Diego, CA and Kailua-Kona, HI-based Cellana, Inc. has signed an Asset Purchase Agreement with Cyanotech Corporation for the sale of Cellana’s six-acre production and research facility, known as the Kona Demonstration Facility (KDF). KDF is located adjacent to Cyanotech’s existing 90-acre site at the Natural Energy Laboratory of Hawaii Authority (NELHA). The acquisition includes all existing equipment and other assets necessary to operate the facility.

The KDF has been used extensively for microalgae research and production since 2009. Following the closing of the transaction, Cyanotech expects to use the facility to expand its research and development capabilities, as well as supplement its production capacity, develop new products and explore new production techniques.

Cellana operates the KDF pursuant to a sublease agreement with NELHA. As part of the Asset Purchase Agreement, Cellana has agreed to assign this sublease agreement to Cyanotech, subject to the approval of NELHA and the State of Hawaii Board of Land and Natural Resources (BLNR). The closing of the acquisition is conditioned upon the approval of NELHA and BLNR, among other standard conditions. Cyanotech expects the transaction to close in the fourth quarter of the 2018 calendar year.

Over the past seven years, Cellana has directed over $30 million of investment, collaborative funding, and grant funding into developing and validating its ReNew™ Algae platform of high-value, non-GMO algae strains rich in omega-3 nutritional oils, proteins, pigments, polysaccharides, and fuel-grade oils. During this time, Cellana has produced over 10,000 kilograms of ReNew™ Algae at KDF in Hawaii for processing and testing of multiple high-value and high-volume biomass components, including multi-ton quantities of its leading commercial algae strain KA32.

In May, 2018, Cellana signed a term sheet for $27 million of debt-based project financing with an undisclosed project financing partner for a proposed 54-acre commercial algae facility to be located adjacent to KDF. The proposed 54-acre commercial algae facility is expected to produce 700 to 800 metric tons of KA32 algae (on a dry weight basis) annually.

“KDF was designed to allow Cellana to identify, develop, and demonstrate commercially significant yields of algae strains for large-scale commercialization,” said Martin Sabarsky, Cellana’s Chief Executive Officer. “This mission has been successfully accomplished with Cellana’s leading strain of algae, KA32, and so this is a great opportunity to reduce our current operational expenses while we sharpen our focus on commercialization with our expanding set of commercial and project financing partners.”