Q1 report confirms the company is on track for commercialization and highlights strong management leadership
MeaTech (Nasdaq: MITC) is a global group of deep-tech food companies developing the advanced biotechnology and 3D printing capabilities to produce delicious, nutritious real meat products made from cells, rather than slaughtered animals. The company has set out to circumvent the environmental and ethical issues facing conventional animal husbandry, such as a large carbon footprint, unsustainable water and land usage, and animal cruelty. By developing the technology to produce what they believe will be an authentic high-quality alternative to farm-raised meat, MeaTech is positioning itself to benefit from a growing alternative protein market.
The cultured meat opportunity
The global cultured meat market is in the early stages of growth. Kearney expects the market to grow at 41% p.a. between 2025 and 2040, leading to a 35% global meat market share and a $US630 billion revenue opportunity. That’s well in excess of the 12% p.a. compound growth rate expected by the FAO for global meat consumption between 2020 and 2029 which will be driven by population growth and wealth accumulation.
The projected growth of the cultured meat market is due, in part, to how it is increasingly being viewed as a healthier and less contaminated cruelty-free protein source. This sector presents a significant growth opportunity in that it is still in the early stages of developing the infrastructure needed for scaling.
MeaTech’s emerging leadership position
MeaTech is building a position as a market leader in this emerging sector with a technology game-changer. The company has developed a unique multiple-nozzle modular printing head that can produce complex structured meat products with pinpoint precision at an industrial rate of production without impacting cell viability. This represents a significant step forward for the industry as it provides meat manufacturers and retailers with the capability to produce whole cuts of meat with formations and proportions of fat and muscle tissue that mimic conventional meat.
MeaTech’s 3D printing technology can accurately print repetitive fat and muscle cell combinations that are customizable based on consumer demand. The company will reportedly be able to scale up production of a wide variety of steak cuts and other meat products with uniformity of thickness, size, density, and shape. This development is being seen as a technological breakthrough that could help enable the entire cultured meat sector to achieve consumer acceptance and scale.
Cost management is a key theme in MeaTech’s Q1 report. General and administrative costs decreased from $2.8 million to $2.1 million. Research and development costs increased from $1.1 million to $2.1 million and marketing expenses increased from $0.3 million to $1.1 million. As a result, the company’s operating loss increased 28% to $5.3 million, and the company’s net cash surplus decreased 20% to $15.3 million, resulting in a cash reduction of $4.0 million (down from $4.4 million in the same quarter last year).
The company’s focus on R&D and marketing investment is prudent as it accelerates toward commercializing its unique, sustainable solution for manufacturing cultured meat products. Moreover, the company’s astute cash management and focus on value-adding R&D investments is resulting in a conservative cash burn rate while remaining positioned to generate revenue from 2023 onwards (Zacks Small-Cap Research).
MeaTech announced several important milestones during Q1, including its intention to build a cultured avian pilot plant and R&D facility with its wholly owned Belgian subsidiary, Peace of Meat, to help propel its market entry and build on its competitive advantages. Peace of Meat also recently signed a joint development agreement with ENOUGH, a leader in the field of mycoprotein, a fungi-based fermented food ingredient. The collaboration is aimed at accelerating MeaTech’s go-to-market strategy for hybrid products which seems to represent a significant opportunity for the company in an emerging hybrid food market.
On track for commercialization from 2023
MeaTech’s Q1 report and recent announcements support the stock’s investment thesis, which is based upon generating revenues from 2023 and revenue growth acceleration shortly thereafter (Zacks Small-Cap Research). Management is investing the company’s cash responsibly with their commercialization goal firmly in mind. MeaTech’s go-to-market strategy stands out as being particularly focused and astute in comparison with other companies in the broader sector.
Compelling under-the-radar opportunity
MeaTech’s Q1 report confirms that the company is managing its cash appropriately in line with longer term value creation for shareholders. And as it transitions from a development-stage player to industry leader, MeaTech will benefit from the enormous growth expected in the alternative meat market in the coming years. As a result, MeaTech could be a compelling under-the-radar investment opportunity at the heart of the structurally growing food tech sector, and specifically the cultured meat field, which both stand out as uniquely compelling growth themes within the Nasdaq universe. Zacks recently set a target price for MeaTech (MITC$) stock at $14, which is 209% higher than the current stock price ($4.52). The stock seems to be a leading pick in the sector, and recent stock price weakness likely offers an attractive buying opportunity.