Episode 13: Steakholder Foods’ Secret Sauce

Sure, so thank you for having me, Frank. Steakholder Foods is a publicly traded company on the NASDAQ that develops 3D printers that print complex cuts of meat. We also produce less complex hybrid products, and we were established more than three years ago. We've uplifted to the NASDAQ. We own 100% of a Belgian company called Peace of Meat which develops avian biomass and cultured foie gras, and we are mainly trying to make the world a better place through cultured meat production.

The process, I think for the main, like the leading companies in this sector, is the same. We collect cells. In our case, we collect stem cells, we differentiate them into muscle and fat, we proliferate them, and then we either take the biomass and add it to plant-based products, which is called hybrid products, or the next stage is to load our printers with this biomass, print certain products, then we take these products into incubation for a few weeks. After a few weeks, you have a 100% cultured meat product that you can eat.

A lot of sleepless nights, I think. Hearing 'no' most of the day about everything, and still continuing moving forward and finding the right solutions. We believe that the technology is there, I think the capabilities are there, and the demand is there. It's only a question of pursuing this road. We understood that with the high-end printing capabilities, we can develop complex cuts of real meat, and we can produce even products that the cow cannot produce. I think very fast we went to a proof of concept printer that we had. We printed, like I think less than a year after we were established, a thin tissue of carpaccio tissue, and then we understood that we are at the right pathway and that it's only a question of time where we will succeed in more complex products.

Yes, so I studied law. I was a lawyer for approximately 12 years at my only law firm, mainly with the commercial angle to it. And there I met one of my partners that established together with me what was called MeaTech, now Steakholder Foods. And there was a time that I felt that I needed to do something different. It was too boring to stay only a lawyer, and I slept too good, I think. I looked for something that was much more challenging and that will leave an impact, not only for myself, for my daughters, for my environment. And from there, I think everything is history. One of the partners thought that we can harness his printing brain, that he had very huge knowledge in printing, and if we can harness this knowledge to 3D print steaks. And then after a few days, we started the company.

Sure. So first of all, and I think it's the most fundamental challenge, but I see it solved, it's there's no regulation. It's not something that is allowed to be consumed and produced, and there's only regulation in Singapore right now. So we've started a company knowing that we are about to develop a product that is not allowed to be sold yet. But I think that we understood that we saw the landscape, we saw the ecosystem, and we felt that it's only a question of time. So that was like challenge number one. And challenge number two is that no one has done it before. So no one has developed a 3D printer that's supposed to print at very high accuracy and footprint a certain tissue, and no one has printed the cells and kept them alive after they are printed and as it was incubated. So there were a lot of question marks, but we saw that these are question marks that can be met and addressed. So I can list now 20 more challenges like that I can think in a second that we have on a day-to-day basis, but all of these challenges are addressed at the end.

Yes, I think that it's natural to reassess all the time when you are a startup and you are a small R&D company. No one really knows what the right strategy is in like five, ten years. We know what's right for us for today, but as we are maturing, we begin to understand exactly, we begin more to understand the ecosystem that we're active in and the needs of the market. We understood that our printing capabilities and our technological capabilities here in-house, they are a real edge. And I think that if we will classify ourselves only as a B2B player that will sell printers in the future, I think it does not make sense to us. I think that we have certain territories that we can trace down and say, okay, these territories will be relevant to a B2C model, but it does not come on behalf of selling huge quantities of biomass to the giants of the world in the future, or maybe selling also printers to relevant players that will want to purchase the printer in a certain revenue-shared basis. So I think the current business model makes more sense to the place where we are today.

So we are not producing anything yet, and no one does, frankly. No one produces anything yet, also not the more popular companies that have raised much more significant amounts than us. No one sells anything yet. So it makes sense for us to, one, and that's something that we've touched based on like last few months ago, we are open for collaboration. We believe that these challenges can only be met through collaborating. So we've updated lately that we are in collaboration with a Singaporean company that develops fish alternatives, and we are also in current collaboration with companies that I cannot disclose their names but are really at the top of the hill with respect to cultured meat companies that want to maybe harness our printing capabilities with their biological capabilities. And I believe that as time will go by, we will see also the giants of the world joining this collaboration activities of Steakholder Foods. And I think that once we will see these giants collaborating with a small company but very innovative company, Steakholder Foods, it will show that we are real, we are here to stay.

So we are with our eyes open, we are very realistic. I think that our main competitors are active three or four more years than us, so I cannot say that we are exactly at the same stage in every aspect as they are. I can say that we are moving forward as fast as possible. We've achieved a lot, I think, in these three something years compared to our competitors. And I can say that still what currently differentiates us from our main competitors is one, the printing capabilities which are second to none. I feel comfortable saying it, and as far as we know, no one has the printing capabilities already ready for industrial scale as we have. And second of all, we've tackled a few species. We are not focused only on one species. We are currently developing and tackling bovine, avian, porcine, and fish through collaboration. So I think our portfolio is more diverse. I think that another key element that is very relevant for Steakholder Foods is that all our process is patent protected. We have currently 16 patent applications in various stages, one granted patent that we've received recently in Australia, and everything is fully owned by Steakholder Foods. We are not like a spin-off of a certain university or a TTO, no collaboration with respect to joint IP. Everything is fully owned by Steakholder Foods. And I think the next thing that differentiates us, and it's a plus and a minus, is that the fact that we are a publicly traded company. We are the only publicly traded company, and from one side it's a challenge because we are affected by a market climate. I think that on the other side it's a huge advantage because we are open for anyone to join us and become a stakeholder, and that's something that is not relevant for our competitors which are private companies and they are not open for anyone to become a part of this revolution. And I believe that once the fire will be set, there's no end for the possibilities of Steakholder Foods because it's public, and because it's public in the largest stock exchange in the world, the NASDAQ.

So I think it's, we at the time we were publicly traded in Israel, and it made sense to us to uplift to the NASDAQ, which is the main, the U.S. market, the main market that we are targeting. And I think that the remainder of our competitors will uplift at a certain point. I think it's a question of size. No one could have foreseen the explosion that was in the last few years in this sector. If you would ask me four years ago, I would say, and if I would know the circumstances now, I would have stayed private for sure, because like our valuation currently is undervalued if I compare it to our technological achievements compared to our competitors and their valuation. But again, I don't think that much is needed for it to change in a second and this to explode. So we are really optimistic. As long as the technology is advancing and commercially we are advancing, we know that valuation and market size will come.

So I think that our obstacles are similar to the obstacles of this whole sector of the cultured meat. First of all, regulation, as I said. I think the second challenge is cost. So everything that is involved in this process of creating a cultured meat product, a 100% cultured meat product, is not cost-effective yet. The growth factors, the media, the equipment, it's all like something, it's a process that was taken from the pharma industry and is trying to adapt itself to the cultured meat industry. But we see costs reducing all the time. I see ourselves reducing and addressing this challenge through collaboration also with the industry. Third challenge is related to technological barriers itself, so where no one really produces 100% cultured meat complex products yet. Like the products that we see in the market today are a mixture of the plant-based product and certain biomass that is integrated into it. And we've published lately a product that emphasizes our technological capabilities, the Omakase beef morcells, which is a 100% cultured meat product with very nice muscle alignment and density alignment of the muscles. And I think that at the technological stage there are still barriers to meet, but we see ourselves progressing all the time. So I don't see any challenge here that won't be met as time will go by.

Yes, yes, for sure. So that's why at our landscape of products that we see entering the market, we foresee the hybrid products to enter the markets first. So they will be more cost-effective because the percentage of the cultured biomass into a plant-based product will be less than 100%. It will be at the range of between I guess eight and twenty-something percent of cultured biomass. So cost-wise it will make sense to produce these products. They will compete with the plant-based products, and I think that one can ask for a premium for these products because they taste much better and there are more advanced technological advances than the plant-based products. And I believe that in the future we'll understand probably that they are also more healthy than plant-based products because they take out of the equation certain ingredients that today the plant-based product manufacturers use to mimic the taste of real meat. The moment that you add real fat, cultured fat, into it and replace these products, then there's a high possibility that this product will be also tastier. But as time will go by and advance, we will see more complex products entering the market, and in the end of this road we will see 100% real meat like a T-bone steak or Wagyu steak produced through a cultured, cost-effective process.

Exactly, it's exactly the same. Beyond the, like when Beyond Meat entered the market at the time, it was not a cost-effective product, like it was very costly. But as time went by, cost went down. It's the same exactly as you mentioned with the electrical vehicles. At the past it was like a very, very costly product, only for the rich people. Now we see the technology coming in, and in a few years there will be the only cars that we drive. Yeah, we won't see petrol cars, or maybe like it will be a niche, the petrols. So I think it's like you cannot beat technology at the end and advancement.

So our main target will be the United States, and that's where we are traded, that's the largest market, and that will be for sure our main market. We will target Singapore as well because that's the only country today that allows to sell cultured meat, and we believe that with our current products there's a high possibility that we'll be approved to sell our products there, hopefully. And Australia was lately granted us our first granted patent, so it makes sense to target Australia as well. Europe, so we have a subsidiary that we hold 100% in, it's located in Belgium. We've updated lately that we are planning to establish our pilot plant facility there in Belgium, in the district of Antwerp. So these are the first markets, and then in the future we will expand ourselves wherever it makes sense.

So we see ourselves finalizing our pilot plant approximately at 2024. It's a question of capex, but technology-wise we are there already. I think that once there will be more clarity regarding regulation in the United States, we will be much more comfortable disclosing a timeline for an establishment of a facility there, a production, manufacturing, and sale. And I think that in the next few years we will see at least one plant that will be established by Steakholder Foods, at least one plant.

So we did not aim to be swallowed by one of the giants. I can say that it's something that was put on the table more than once in the past. We are looking to develop a real company. So we are currently a 75-person global worldwide group, the Steakholder Foods group, and we are growing every day. So my exit strategy personally is to establish a real company that will establish real facilities. I don't, we are not naive that we think that we can do everything by our own, and there will be collaborations. But I think that the collaborations are coming at the stage right now that Steakholder Foods is much more mature, feels much more comfortable to collaborate with the industry, patent-wise it feels much more comfortable, technological-wise also. And hopefully the exit strategy will be selling real products at the end to the consumer, and then in parallel selling hardware or biomass on a B2B basis to the main players of this world in this industry.

So we have the best people here. We have the best positive people here. No, in a sense, we are only looking for the angle how to solve the problem. The problem is there all the time, 24/7. We are problem solvers, and we are trying to stay visionary here. We look, we're looking far. We look what our competitors are doing, but we don't mimic them. We are thinking always about what's the best pathway for Steakholder Foods. And I think that this combination allows us to achieve what we've achieved in three years.

Thank you very much, and you are welcome to us. If you're in Israel, you can come and taste our products.

Thank you. Bye bye.