Meatech 3D Ltd (NASDAQ:MITC) (MeaTech) is developing proprietary three-dimensional printing technology to be used in conjunction with its cultured meat process, which will enable the manufacture of premium meat products such as marbled steak. Alternative meat demand is booming and cellular agriculture could represent a new solution to the ever-increasing demand for protein. Cellular meat has the potential to significantly disrupt both meat- and non-meat markets over the next several decades.
Meating demand
Global demand for protein has been driven by population increases and rising wealth in markets such as China, and global meat demand is expected to almost double over the next 20 years, according to Kearney. Growth, however, is set to be driven by the plant-based and cultured meat alternatives, with Kearney estimating that cell-based meat will account for 35% of the global meat market by 2040. The shift towards alternative meats (ie plant-based and cultured meat) is being driven by a number of factors, including widespread consumer concerns for animal welfare, the perceived and actual health benefits of some types of alternative meats and environmental and sustainability issues.
Printing the future?
Cellular agriculture is the process of deriving conventional agricultural products directly from cell culture and fermentation, without the need for animals. Cultivated meat is created by harvesting stem cells from an animal, which are then allowed to grow in bioreactors so they multiply and differentiate to create muscle and fat tissue. The cells are eventually harvested and separated from the growth media and impurities. The tissue produced is biologically equivalent to the meat tissue that comes from the original animal. MeaTech is also developing a 3D printing process that uses the cultured muscle and fat cells as bio-inks. Using unique edible scaffolding materials, these are printed into a steak structure. The end product, therefore, will have the same structure and appearance as conventional meat. In December 2021, MeaTech printed a 3.67oz cultivated steak and in January 2022 it announced a new CEO to lead it from development stage to a production company.
Valuation: No listed peers at present
Due to MeaTech’s start-up nature, financial forecasts cannot be made with any certainty and management does not expect to report positive revenues or profits in the short to medium term. Uncertainty is compounded by regulatory risk, as cultured meat is not yet approved in most jurisdictions. As MeaTech is the first listed cultured meat company, it has no direct peers. Its net cash position was $30.6m at end H121. Given the free cash flow burn was $5.9m during the period, assuming no further acceleration in cash burn would suggest the company has enough cash for the next c 2.5 years. That said, the trend has clearly been an acceleration in cash burn and the intent to start to design and set up a pilot scale cultured chicken fat facility in Belgium during FY22 is likely to cause cash burn to accelerate.
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Business description
MeaTech 3D is a cellular agriculture animal protein technology company. It is developing a proprietary cultured meat production process, which is complemented by a proprietary 3D printing technology process to manufacture proteins without the need for animal slaughter.
Bull
■ Cultured meat does not involve animal slaughter.
■ MeaTech’s process is much less energy-, water- and CO2-intensive than traditional farming and slaughter.
■ MeaTech’s 3D printing process requires minimal scaffold material and non-cell-based contents.
Bear
■ Cellular meat is subject to regulatory approval, which can be complex and varies by jurisdiction.
■ MeaTech is still in the start-up phase and hence has no revenues or profits.
■ Work still needs to be done to scale up the process to pilot and then commercial scale, and to reduce costs to make the end products affordable to consumers.
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