Wednesday, December 6th 2023

BSF Enterprise PLC

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Are BSF Enterprise carving out a new market ?


“…But it seems likely that cultivated meat, once it becomes affordable, will find a significant niche. The #BSFA tissue-templating platform also extends beyond lab-grown meat to a range of other potential products of course…”


The value of BSF Enterprise PLC (LSE:BSFA) surged earlier this year when the UK-based biotech claimed to have produced the first steak fillet of cultivated meat. Popularly referred to as ‘lab-grown meat’, the emerging technology promises an alternative to traditional meat production that requires the maintenance of herds that produce around a quarter of all greenhouse gases, and which occupy vast swathes of de-forested territory. 

BSFA acquired 3D Bio-Tissues (3DBT) last May, a spin-out from the University of Newcastle upon Tyne, which uses cell-based tissue engineering to generate lab-grown leather, human corneas, collagen growth, and skin substitutes, in addition to cultivated meat.

BSFA is pursuing three strands of IP, each with a different sectoral focus, development and revenue timeline. The first is the ’tissue templating’ platform used to grow the company’s tissues. The second is a skincare product that increases collagen production in human skin cells, suitable for use in cosmetic products. And the third, City-mix, is an animal-free cell growth agent for culturing muscle and fat cells for lab-grown tissues. Composed of a specific formulation that facilitates a process called ‘macromolecular crowding’, City-mix differs from mainstream processes for developing cultivated meat, which involve extracting stem cells from a donor animal and nurturing them in a ‘bioreactor’ that serves as a ‘scaffold’ for proliferating cells to replicate a natural texture. The purported advantages of City-mix include higher yields, reduced need for fewer expensive supplements, and the elimination of animal- derived serum, ensuring animals do not suffer in the production of the cultivated meat.

BSFA is commercialising its IP by developing channels with prospective manufacturers, wholesalers and distributors, and by exploring possible mergers and acquisitions. The company is led by CEO Dr Che Connon, a 3BDT founder and a professor of tissue engineering at Newcastle. Dr Connon is also a founder and director of Atelerix Limited, which offers novel storage technology to support cell and tissue logistics, and Cellularevolution Ltd, which is building a new class of animal cell production bioreactors. Non-Executive Chairman Min Yang has commercialised innovations in the telecommunications industry across the Australasian region, and Non-Executive Director Geoffrey Baker has helped drive a innovations including a bio-medical apparatus for sleep-apnoea, and a high-performance engine technology currently being developed in China as an auxiliary power unit for electric engines.

A 21st century fillet


In February BSFA announced that 3DBT had succeeded in producing a pork fillet using the bioreactor-free City-mix cell booster, allowing the company to claim that it as the purest artificial meat yet produced.

The process began by putting cells extracted from a pig into a cell-culture environment, allowing them to grow and divide. The cells were then cultivated using the company’s proprietary structured meat technology along with City-mix, which turned the cells into structured meat. The update said that in its raw state ‘the cultivated steak fillet was very similar in appearance to conventional meat with fibres clearly visible. On cutting the fillet, it displayed similar structural integrity to raw conventional meat, including resistance to breaking and compression. In addition, it was the same to the touch in terms of consistency and elasticity and, as with fresh traditional meat, had no obvious aroma while raw.’ On pan-frying ‘the fillet seared easily, showing the typical browning, charring and crisping on its surface, and the aromas were identical to those of frying traditional pork.’ And when ‘eating the cooked meat, it was found to exhibit very similar texture, consistency and flavour to that of traditional pork.’

The company’s announcement included a video of 3DBT researchers and management snacking on the fillet, the testers agreeing ‘that both the texture and the taste in the mouth was indistinguishable from pork steak.’ Earlier this month BSFA said cultivated pork products will undergo testing at a technical event organised by the company ‘before the end of H1 2023’, to which key shareholders will be invited, and which will involve ‘data collection, inspection and analysis of the product in raw and cooked state’.

The successful test follows BSFA’s significant investment in 3DBT following last year’s acquisition. Lab capacity has been more than doubled to 2,400 square feet, allowing for increased City-mix production of 200 litres a month. The enhanced facility gives 3DBT greater scope to showcase products to potential customers interested in commercialising lab-grown meat, leather and other products. Late last year a partnership was agreed with another biotech, Qkine, according to which City-mix will be developed alongside Qkine’s growth-enabling protein engineering technology with the aim of streamlining the production time and costs for growing cultivated meat.

An update published last month on efforts to commercialise City-mix reported engagement with more than 60 cellular agriculture companies, of which 26 had progressed to new business opportunities, a 43pc conversion rate. 22 product evaluations are underway. A further two companies have also completed successful evaluations and are expected to put in orders this month. BSFA has also been on the lookout for new markets beyond cultivated meat and leather. Two new target markets include biotech companies such as those working in gene therapy, stem cells and regenerative medicine; and life sciences companies and academic institutions researching those disciplines. BSFA is currently engaging with appropriate distributors in the UK, France, Canada, Australia, Switzerland, Italy and the Netherlands, and has identified appropriate sales channels for each market, with a direct sales model being adopted for cellular agriculture companies.

BSFA’s most recent annual report, for the year ending 30 September 2022, stated a net loss for the year of £930,039 (2021: £58,325 loss), reflecting the corporate, legal and advisory costs in connection with the acquisition of 3DBT and re-admission to the LSE. The group had cash of £1,061,529 as at 30 September 2022 (compared with £359,868 at 30 September 2021) and approximately £936,000 as at February, the date of the report. BSFA raised another £2.9m this March.

Carving out a market


The ecological case for lab-grown meat sounds compelling, but there are many technical, economic and cultural challenges. There is, to be sure, growing growing consumer concern regarding the environmental implications of beef production. The UN Food and Agriculture Organisation estimates that about 15pc of all greenhouse gas emissions derive from livestock, mostly cattle reared for beef and dairy. And cultured meat is slaughter-free, and untainted by antibiotics, hormones and diseases such as salmonella and E. coli. Public awareness is indicated by estimations that there are now more than a million vegans in the UK, and as many as 100 million worldwide.

The cultivated meat concept has already come a long way since Google co-founder Sergey Brin bankrolled the first burger made from meat cells grown outside an animal back in 2013. Though the patty cost some $330,000 to make it at least offered proof of concept. Seven years later Singapore became the first country to sell lab-grown meat, and by 2021 the sector was attracting $1.9bn of venture capital. Last year the US Food and Drug Administration announced it had completed a ‘pre-market consultation’ on lab-grown chicken which raised no safety concerns.

But the difficulties of turning concept into economic reality have been highlighted by travails of Beyond Meat, once a poster child for the sector. Shares in the ‘shamburger’ maker soared eightfold in the weeks after its May 2019 flotation, as it raced to a market cap of $14bn. But by last year its price was down four-fifths. On launch analysts believed Beyond Meat would turn free-cashflow positive by 2022 by virtue of 40pc compound annual sales growth, but the company actually reported a 10pc drop in sales last year. A cash infusion will probably be required some time this year to help the company get back on track.

The fact is that lab-grown meat is still very expensive. An analysis published last month in the Journal of Agriculture and Food Research suggests that, even with scaling up, cultured meat would cost about $63 a kilo to produce: 2021 wholesale per kilo prices for lean pork and beef were under $4 and just over $6 respectively. Over time the cost of cultivated meat should fall as the technology improves and the scale of production expands. McKinsey estimates that cultivated meat might achieve cost parity within the next decade.

There are other issues. Mainstream producers are lobbying hard – Italy recently banned lab-grown meat to protect local farmers. Perhaps the biggest challenge will be carving out a consumer base. The concept will have to become normalised among meat-eaters: a third of carnivores – and more than half of vegetarians – are unwilling even to try cultivated products. And plant-based foods and non-meat proteins are rapidly gaining popularity among those seeking alternatives to meat produced from herds. There are significant consumer shifts away from beef and lamb towards chicken.



But it seems likely that cultivated meat, once it becomes affordable, will find a significant niche. The environmental case has clear potential to appeal to an increasingly sophisticated retail marketplace. A growing world population – projected to reach 10bn by 2050 – is putting ever greater strain on the world’s land, and governments are ever more open to whatever innovations might help them meet increasingly pressing climate change targets.

BSFA, then, seems set to tap an ever growing market, if the company can maintain its current trajectory. Its share price, just under 16p at the time of writing, is up 75pc over the past year, taking its market cap to £16m. And the company’s tissue-templating platform extends beyond lab-grown meat to a range of other potential products. This is clearly a speculative play, but one with the potential to appeal both to investors’ social and financial concerns.