Moolec Science, an innovator in the agrifood sector, has announced during their recent earnings call that they received USDA-APHIS regulatory approval for their Piggy Sooy platform, a first in the industry.
The company, led by CEO Gaston Paladini, CFO Jose Lopez Lecube, and CSO Amit Dhingra, also discussed the promising future of their safflower platform products, GLASO and SPC2, and their financial growth. Despite the challenges posed by the Argentine economy, Moolec remains optimistic about its cost structure and the potential impact of currency devaluation on its costs.
Key Takeaways
Moolec Science has received USDA-APHIS regulatory approval for Piggy Sooy.The company is conducting field trials for Piggy Sooy in the US and discussing further regulatory steps with the FDA.Pre-commercialization of GLASO is underway, targeting early 2025 for market entry.Two US patents have been granted for Moolec’s SPC2 product.Financial performance shows increased revenues and expenses with a gross margin of around 18%.The company holds a cash position of $4.3 million and has secured additional funding through an equity line of credit.Moolec has a global presence with limited exposure to the Argentine economy; inflation and currency devaluation are not expected to significantly impact the business.
Company Outlook
Moolec is optimistic about its future, with plans to enter the market with GLASO by early 2025.Field trials and planting of Piggy Sooy are progressing in the US.The company is actively working on closing off-take and commercial agreements with potential customers.
Bearish Highlights
The company reports increased expenses alongside revenue growth.Some costs are denominated in Argentine pesos, which are subject to inflation and currency devaluation.
Bullish Highlights
Regulatory approval of Piggy Sooy by USDA-APHIS is a significant milestone.Positive feedback and interest from potential customers for both Piggy Sooy and GLASO.The company is scaling up their YEA1 product and focusing on regulatory compliance.
Misses
No specific financial misses were highlighted in the call summary.
Q&A Highlights
The CEO addressed concerns about the Argentine economy, stating that the impact on Moolec’s cost structure is minimal.Paladini expressed gratitude for the USDA approval and emphasized the company’s commitment to innovation and sustainability.
In summary, Moolec Science’s earnings call painted a picture of a company at the forefront of agricultural innovation, with a strong focus on sustainability and a strategic approach to regulatory compliance and market entry. The company’s financial health appears robust, and despite some exposure to economic instability in Argentina, the overall outlook remains positive. As Moolec Science (ticker not provided) continues to make strides in its field, the industry will be watching closely to see the impact of its pioneering products on the agrifood landscape.
InvestingPro Insights
Moolec Science, while pioneering in the agrifood industry with recent USDA-APHIS approval and optimistic about its future products, presents a mixed financial picture according to the latest data from InvestingPro. Here are some key metrics and tips that investors should consider:
InvestingPro Data:
Market Cap (Adjusted): 44.33M USDP/E Ratio: -7.08, indicating the company is not currently profitableRevenue (last twelve months as of Q2 2024): 2.9M USD
InvestingPro Tips:
Analysts do not anticipate the company will be profitable this year, which aligns with the negative P/E ratio.The company’s stock has experienced significant price volatility, with a 1 Year Price Total Return of -60.99%, reflecting the high-risk nature of investing in Moolec Science.
For investors interested in the agrifood sector, these insights may suggest a cautious approach to Moolec Science. With the company quickly burning through cash and its stock price often moving in the opposite direction of the market, potential investors should weigh the innovative strides against financial stability. To access more in-depth analysis and additional InvestingPro Tips, visit https://www.investing.com/pro and consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are 16 more InvestingPro Tips available for Moolec Science, providing a comprehensive understanding of the company’s financial and market position.
Full transcript – Lightjump Acquisition (MLEC) Q3 2024:
Bruce William: This morning, you will hear from Gaston Paladini, Chief Executive Officer and Co-Founder of Moolec Science, together with Jose Lopez Lecube, Chief Financial Officer and Amit Dhingra, Chief Science Officer. In today’s call, we will be referring to a presentation that is available on the company’s Investor Relations website. Moving to Slide 2, this conference call is mainly for informational purposes. And during this call, the company will be making-forward looking statements regarding future events and results, which are not historical facts and include, but are not about the company’s beliefs and expectations. Forward-looking statements involve inherent risks and uncertainties. Further information regarding these and other risks are included in the company’s annual report on Form 20-F filed with the SEC, also available on the company’s investor relations website. Now moving to Slide 3, I would like to turn the call over to Moolec’s CEO, Gaston. Please go ahead.
Gaston Paladini: Thank you, Bill, and good morning to everyone. It’s a pleasure to once again provide our latest business update. Today’s agenda will address three main topics. First, I will highlight our outstanding progress on Piggy Sooy. Second, Amit Dhingra, Moolec’s Chief Science Officer will walk you through our highlights on safflower platform. And finally, Jose Lopez Lecube, our Chief Financial Officer will present our financial highlights from Q3. Let’s move now to the next slide. I want to share with you how proud I am of our team consistent execution on all fronts. Today, I would like to hone in on our news breaking success on the regulatory pathway with our achievement of Piggy Sooy. I cannot simply describe how big of an accomplishment it is to be the first company in the industry to obtain regulatory approval of this kind from the USDA-APHIS. As I said before in the press release from this particular topic, Moolec is unlocking the power of plants by leveraging science to overcome climate change and global food security concerns. I am very proud of the Moolec team creating value for the shareholders and the planet at the same time, while rewriting the history of biotechnology. With this approval, USDA-APHIS RSR has then Piggy Sooy unlikely to pose increased plant pest risk related to non-engineered soybeans thus giving Moolec a green light to move and ship our products without individual permits relating to the APHIS regulation. For those new to the story, Moolec developed a unique and patented soybean platform technology under the trademark Piggy Sooy. Our scientific team has achieved high level of expression of animal meat proteins in soybeans, where the seeds exhsibited portion protein expression level up to 26.6% over total soybean protein. Now turn to the next slide, so we can share with you why we understand Piggy Sooy is relevant for our planet. In Moolec, we work daily with the mission to create food ingredients that can make a positive impact on the food industry environmental footprint and further strengthen food security. First of all, the industry is already growing soybeans in order to feed pigs that are then slaughtered to produce processed meat products and cuts of meat. Roughly 1 acre of traditional soybean can feed 10 pigs used for livestock. To produce these livestock, it is estimated that more than 60,000 liter of water are required and that the process produce around 550 kilogram of CO2 equivalent emissions. Now talking about Moolec, in contrast, if we achieve to farm 1 acre of Piggy Sooy, this acre could potentially produce pork meat proteins equivalent to the same 10 pigs as well, while not requiring any additional water to produce them and will not produce extra CO2 emissions. Is that amazing? Turn with me to the next slide to see what we understand is Piggy Sooy value proposition. I would like to give you one perspective on the attractive value presented by our Piggy Sooy platform and why we are confident it is a market potential going forward. This is currently how the industry works. As highlighted in the previous slide, the industry consumes a significant amount of soybeans used as animal feed to support livestock, later slaughtering for meat. The industry is also using traditional soy protein ingredients, which are generic soy commodity plants used as meat extender or fillers in the processed meat product such as sausages, burger, nuggets, meatballs, dumplings, and so on. By the way, these kind of products represent 70% of the $1 trillion global meat market. That’s huge, $700 billion market. These traditional soy protein ingredients contain no meat flavors and other meat properties when compared to meat and need to be mixed with extra ingredients, mostly chemical, colorant and flavoring in order to provide different functionalities to processed meat products. By the way, I am very well acquainted with this traditional meat industry since I’m part of the fourth generation of one of the largest processed meat players in South America Paladin. So now let’s talk about Moolec and what Moolec will offer. Moolec will leverage commodity supply chain, introducing science at the beginning of the value chain as new ingredients for food companies. Remember, we started with seeds. And how will we do this? Well, Piggy Sooy will be a unique product used each replacement as an ingredient with a higher level of nutrition could potentially put the same iron content, flavor and color as true meat. As a result, food processors could replace part or eventually all additive used for coloring and flavoring as well as real meat from slaughterhouses. Now I leave you with Amit Dhingra, Moolec Chief Science Officer, who will provide an overview of Moolec Science and Piggy Sooy milestones on top of the safflower platform highlights. Amit, over to you.
Amit Dhingra: Thank you, Gaston, and good morning to everyone. As critical as our regulatory approval milestone is, we continue to work on commercializing our product. I want to emphasize our team’s excellent track record of effectively delivering on scientific and product development milestones. From the discovery stage in 2020 to the planned transformation stage, regulatory approval applications and patent applications, we have consistently produced results and continue to build our IP portfolio and file regulatory applications in other territories. With the approval from the USDA-APHIS, we started field trials at three different locations in May 2024, with fourth generation seeds. Everything is progressing on schedule and as planned originally. Starting next year, we will strategize the breeding of the selected events and scale up the production in two to four years. The commercialization process will likely begin in 2027, 2028. We look forward to updating you on our progress and implementation of our plans in subsequent business updates. Moving on to the next slide, I would like to highlight our recent achievements for Moolec’s safflower platform in terms of product development and intellectual property. Moving on to Slide 10, I will begin with our team’s progress on gamma-linolenic acid, safflower oil or GLASO. This nutritional oil has many varied applications, such as dietary supplements and functional foods, cosmetic and personal care, pharmaceutical industry, food and beverage, animal nutrition and others. We are proud to share that our GLASO is now in the pre commercialization stages. In February of 2024, we started trial production of GLASO at our processor facility as we optimized, processed and produced roughly 5 tons of material to develop pre-commercial collaborations. We began planting in April and May 2024. We have successfully contracted 600 acres of production with key growers to plant GLASO seeds for crushing purposes. We have additionally contracted another 60 acres, which have been planted for seed production. We use roughly 200 tons to 400 tons of safflower during this production season. Shortly before the year ends, we plan to harvest, crush and market our 2024 GLASO seeds, as we engage with potential customers and partners. Now to the next slide, I would like to highlight our exciting progress on SPC2 product. Two U.S. patents were granted for SPC2. These patents extend the protection of our technology and processes that were used to increase the expression levels in safflower seeds until 2041. Building up on our intellectual property portfolio is one of the strategic pillars at Moolec. To protect our leading edge innovations in the coming years, we continue to pursue patents for all technologies and processes across strategic geographies. Now, I’d like to turn the presentation over to my colleague, Jose, for the financial overview. Thank you very much.
Jose Lopez Lecube: Thank you, Amit, and good morning to everyone. It is a pleasure to be providing this business update of Moolec for the third quarter of fiscal year 2024. Today, I would like to review our latest highlights with regards to revenues, expenses and cash utilization. In particular, we are introducing year-over-year figures from quarter-over-quarter comparisons as we have completed four quarters reporting as a public company. We are confident that this change in how we report the progress of Moolec will provide our stakeholders with a more comprehensive understanding of the evolution of the business given that year-over-year comparisons offer a more view of the company progress. Please keep in mind that all figures mentioned today are in U.S. dollars, unaudited and based or derived from IFRS unless otherwise stated. Let’s move on now to Slide 13. During the third quarter, normalized revenues and other income excluding IAS29 increased year-over-year from nil to approximately $1.3 million. This increase was due to the consolidation of the soy protein ingredient business, which occurred in April 2023. Normalized costs of goods sold increased as well on a year-over-year basis from nil to close to $1 million resulting in a gross margin of around 18%. On the expenses from this quarter, SG&A and R&D have increased to $2.3 million from $1.4 million in Q3 2023. This increase in expenses is mainly related to non-cash items such as depreciation, amortization and equity incentives as well as the consolidation of the soy ingredient business. We continue to be confident in our conservative approach to expenses, while delivering significant milestones and supporting company growth. In terms of cash utilization, operational cash flow this quarter was approximately $2.7 million, which includes close to $1.4 million allocated to lower accounts payable mainly related to transaction costs. On a year-over-year basis, operational and cash utilization has decreased from $4.2 million in Q3 2023, given that this quarter we have had significantly lower cash payments associated with listing costs. Finally, our cash position of approximately $4.3 million as of Q3 2024 was strengthened by approximately $2 million of additional funding received during the end of April 2024, as a result of the utilization of the equity line of credit in place with Moolec. We are very pleased with how Moolec continues to deliver significant milestones such as the USDA-APHIS regulatory approval of Piggy Sooy, while maintaining an adequate corporate structure and a cost efficient strategy. I will now turn things over to Bill for the Q&A portion of our call. Thank you.
A – Bruce William: Thank you, Jose. At this time, our management will be taking questions. You may submit questions through the Q&A chat box by submitting your name and firm in the chat and typing your question. Please be advised that we will ask you to unmute your line to ask your question live. We ask those who would like to participate in the Q&A, if your name and firm is not indicated on your profile, please submit your name and firm in the Q&A before asking a question. Again, you may submit questions through the Q&A chat box.
Operator: Before we take questions from the live queue, we have received a few questions via e-mail. The first question is as follows. This quarter, you highlighted USDA approval for Piggy Sooy. Can you provide more color on the significance of this achievement, what’s next and the opportunity you see?
Gaston Paladini: We are really happy of being the first molecular farming company by achieving this kind of USDA approval. The U.S. government and the agencies telling us that there’s no such a patch risk in implanting our animal proteins in U.S. soil. Very happy of that. I think personally that this achievement is beyond Moolec. I’m quite proud of Amit and Martin Salinas and [Hank] and Bruce, and let’s say all the Moolec team to achieve this great milestone, because I personally believe this, they are right in the history of biotechnology. They are unlocking in some way molecular farming food by getting this kind of approvals. So what’s next? Well, in terms of operations, field trials, we are planting, as we speak, Piggy Sooy in three different locations in the United States without permits because now it’s approved. That will brings a lot of information in terms of product development, in terms of the next step in — of a regulatory front that will be FDA. So, we have already started conversation with the FDA. So, we quite understand how the FDA framework works. I’m quite optimistic of — about how our regulatory team works. So really looking forward to continue, providing information to regulators. I’m pushing, this product from a bunch of seeds to balance and commercialization. So, thank you for the question, and again, I’m very happy and I take this opportunity to congratulate Moolec’s team now in this earning call for this great milestone.
Bruce William: In the business update, you mentioned GLASO was in pre-commercialization stages. Can you talk more about the types of customers and timing of commercialization for GLASO?
Gaston Paladini: Sure. I could do that. Well, yes, GLASO product is in pre-commercialization stages. The type of customers for GLASO and GLA all will be pet foods, dietary supplementation, companies that provide dietary supplements. Ingredient company that blends nutritional oils, not only omega 6, that’s GLA GLASO, also omega 3 It’s very complementary to the EPA and DHA, omega 3 oils. And nutritional beverages, that will be another application as well and some specific food applications. So customers — potential customers are all around this category of products. And this as you said before, William in the question, I don’t know who is answering but who is asking but this is true. We are very close to hit the market with GLASO. We are planting around 600 acres, in Idaho, U.S. for commercial purposes and in active conversation with customers to hit the market, hopefully, by the beginning of — by the first part of the 2025 calendar year. So, we are working hard to deliver. Moolec is a science-based food ingredient company and this is definitely a scientific product — science based product and a huge market understanding that GLA market is around $1.5 billion globally per year. So the opportunity is quite big.
Bruce William: On Piggy Sooy, when can you expect commitments from customers? Have you had feedback from potential customers so far?
Gaston Paladini: Good question. Well, it’s hard to say, specific timing of customer commitments, but I can say that we are receiving very good feedback from potential customers and different stakeholders that are very interesting in receiving samples of Piggy Sooy. Actually, we have already started delivering some samples, but we haven’t had too many seeds to crash and deliver samples. So we are actually multiplying seeds, making a seed increase. Actually, this is happening as we speak. As I described before, in our field trials, we are also increasing seeds to get more seeds to crush, prepare sample for potential customers. So Moolec is a science-based company, but it’s an ingredient company explaining the ingredient business. That’s how the ingredient business work. You need to deliver samples, co-work with established players, co-work with the R&D departments and that relationship take time. This is not just plug-and-play. You need to go work things away with the customers, in the applications. We are in great conversations on Piggy Sooy but let’s go step-by-step.
Bruce William: Now we’re going to take our first question from the live queue. The first question comes from Thomas McGovern at Maxim Group. Thomas, at this time, we ask.
Gaston Paladini: Sorry William to interrupt, but I saw Scott Fortune raising his hand from the beginning of the earning call. Sorry, Thomas, but I would prefer to prioritize Scott’s question, if you don’t mind, William.
Bruce William: That’s fine. We can go — we’ll take Thomas next. So, we’ll go to Scott Fortune at Roth MKM. Scott, please unmute your line and proceed.
Scott Fortune: I appreciate all the color and the progress you’ve made here, but just provide a little more color on the conversations you’re having with you mentioned ingredient foods and dietary supplements. I know you’ve given out a number of samples and delivered to kind of to those different companies. But just a little more color on how those conversations, what’s the feedback for — ahead of this GLASO, you’re still looking to commercialize this in early 2025 here. That’d be helpful from that standpoint.
Gaston Paladini: Well, unfortunately, I can’t reveal names now about who these potential customers are. But what I can say is that we are, in some cases, working to close off take agreements and some commercial agreement. So that will come for sure, and that’s part of the commercial conversation and that’s definitely the output, that Moolec needs to actually progress and move forward with the commercialization of these products. But what I also can say about Piggy Sooy is that this interest is coming from multiple ways. So we are focusing on who — in case of Piggy Sooy. And that will be the majority of the excitement comes from food applications. But we all know that soybean is a very well understood ingredient for feed, for pet foods and for some other applications as well. Pita food goes to hand to hand. So we are also receiving interest from different other industries as well. Again, we are prioritizing food. That’s where our focus is from now. But that’s as I said before, it’s quite tuned to talk now about the soy progress. GLASO overall, yes, probably we will keep you updated very soon in the following business updates or any calls.
Scott Fortune: And then one more question for me just maybe providing a little color around the YEA, Y-E-A one kind of the skill up process here and timing to arrive at kind of the characterization prototypes to achieve regulatory compliance. Just kind of an update on that side of the business from your aspect here.
Gaston Paladini: Sorry. I didn’t understand the question. Could you please, come again, Scott?
Scott Fortune: Color around the YEA1 scale up. If you guys can update that, but just a little more color on that in achieving regulatory compliance as you move forward. Just a little bit of help from that standpoint.
Gaston Paladini: Sure. Yes. Well, one is on track. We use our last business update to talk deeper about YEA1. We are, right now, multiply – no, sorry. This is well, we would not be multiplying. We’ll be scaling up this product with our partner, Grupo Insud in Europe. We are using their facilities to scale up this product and that scale up stage will also bring us samples and information for regulators to in the United States. So quite similar to Piggy Sooy, we are in multiple fronts with regulators, open channels to provide information from both products. This is moving quite nicely, but we need to respect the regulatory, pathway and framework. And I’m quite happy of how our regulatory team internally Moolec with David Herron as an adviser — regulatory adviser of our old team. He’s handling all the different and multiple regulatory fronts for YEA1. So this goes in parallel. We probably will we will expect some results. Not talking about regulation, but I’m talking about overall in the products. The yeast could eventually go faster than plants. Because it’s a controlling environment and plants, you need to — in terms of plants, you need to respect the biology times, the campaigns and the multiplication quite more I will not say easy but quite faster to scale up in liters in a controlled environment than in tanks in open field. But I will summarize my answer to YEA1 and Piggy Sooy and moving forward with FDA in parallel with open channels, providing information. All the things that we are doing now is to fine tune product development and gather information to provide for the regulators in the United States.
Scott Fortune: Thank you. Congratulations again, the USDA and really moving molecular farming forward for the industry.
Bruce William: Our next question comes from Thomas McGovern at Maxim Group.
Thomas McGovern: So a lot of my high level questions were addressed. So I just wanted to focus now kind of taking a step away from Moolec and looking more at Argentina’s economy as a whole right now. So in April for the first time in six months, Argentina achieved a single-digit inflation rate on a monthly basis. So I was just wondering, how your outlook on the hyperinflationary environment in Argentina has kind of changed in the recent months and if you expect this trended decline in inflation rates to materially impact Moolec moving throughout the calendar year and then into 2025?
Gaston Paladini: Well, I will leave the floor to Jose to explain and talk people in inflation rates and Argentina business. Before that I can say that Argentina inflation is going down for sure. So, 8.8 should be crazy but compared with the five month right before, this is definitely going down. Our President, I’m saying now because I’m personally in Argentina. So our President now is in the U.S., expanding the network for investment in Argentina. So it’s a good momentum for the country now. But definitely, it’s the main topic should be inflation and how the Argentina coming will recover. So, Jose, please, go ahead and get deeper into Thomas’ question.
Jose Lopez Lecube: Moolec has a global operation with presence in the U.S., in Europe and in Argentina as well. So that provides Moolec with some exposure to the Argentine effects movement and the inflation as well. So having said that, our business present in Argentina has, for the most part, revenues denominated in U.S. dollars. So from that perspective, inflation movement shouldn’t have a large impact on the underlying business. On the cost front, we do have some costs denominated in local currency in Argentine pesos. So from that end, there is some exposure to the inflation that fly through our cost structure. So conceptually, I would say the following. When there is an evaluation of the Argentine peso that has some positive impact on the cost front for us given that we have some cost to eliminate in the Argentine peso. When there is inflation, when there is high inflation that kind of raise our cost in Argentina pesos a bit. So it all comes to what is, how devaluation and inflation move along. If devaluation is higher than inflation then that has some positive impact on our cost. If inflation is higher than the valuation, that kind of — has some potential higher cost on our P&L. But, again, our costs denominated in Argentina peso is a small part of our overall cost structure. Now looking forward, what can we expect? It’s too soon to tell, but, what we are seeing is a gradual devaluation of the Argentine peso at a 3% per month. And a strong decline in inflation from 25% at the beginning of the year now falling to single-digits. So if things continue in this way, you should see a match between inflation and devaluation. So that provides a stable — some stability in real terms for the local currency.
Bruce William: At this time, it appears that there are no further questions. Therefore, I’d like to turn the call back over to Moolec’s CEO, Gaston for some closing remarks.
Gaston Paladini: Well, thank you, Williams. Well, I really want to thanks, Catalina Jones, our Chief of Staff & Sustainability Officer. So for handling all this greater business update from our side and also thanks the ICR team to help us as usual. I also thank you all here, all the audience for joining us on today’s conference call. Thank you for that. We are, very, very happy, as I said before of the this USDA approval. Moolec is definitely a flagship in molecular farming. This is a proof of that. And, I am also happy that the Moolers are providing value not only for the shareholders and all the stakeholders of Moolec also for the planet. Because if we farm, a Piggy Sooy and this definitely could be very beneficial for our planet in terms of carbon and water footprint compared with livestock. And believe me, that’s where I come from. And my name Paladini is one of the one of the most famous meat brands in Argentina. I’m very well acquainted with the traditional meat value chain. I’m very proud of my family business, but we need to understand we need to find alternative solutions to produce the same animal proteins and meat proteins with science and technology to overcome the mere challenges in the food system. And we need to address carbon and water footprint for sure. So that’s what Piggy Sooy does. So I’m going back to the final remarks. So I’m happy, as I said to share with you this solid execution of Mooler, the team. And we will we continue working hard to the step ahead for sure. A big thanks also to our partners, to our investors and the analysts that are following us and for all the supporters and followers. And thanks again, for joining us today. We look forward to updating you in the next quarter for sure. Have a grand wonderful day or wonderful afternoon there in Europe for our European followers. Thanks.
Bruce William: Thank you all. You may now disconnect.
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