Christian Busse
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Pluri and the Dynamics of Cultivated Meat Investing

investingcultivated meatbiotech

Published: January 5, 2024

Pluri, under its former name Pluristem, is one of the very few companies with peripheral involvement in the cultivated meat industry and presents a unique opportunity to invest in an innovation with the promise of breaking records; however, given the complexities and challenges inherent in this sector, is it truly a worthwhile investment?

Why are we considering Pluri? Because the relationship between Pluri and its subsidiary, Ever After Foods, is well-documented and significant for prospective investors.

To focus on its patented bioreactor platform for cultivated meat production, Plurinuva rebranded as Ever After Foods, leveraging the technological and scientific capabilities of its parent company, Pluri, and the sales, marketing and distribution expertise of Tnuva.

Ever After Foods, spun out of the publicly traded company Pluri, has developed a proprietary technology platform for producing cultivated meat, promising unmatched cost-efficient scalability, according to Notified (April 2023).

For investors, this means that their exposure to Ever After Foods runs through Pluri: their investment in Pluri indirectly supports and benefits from the successes of this subsidiary. After covering operational and development costs, profits from Ever After Foods could potentially be transferred to Pluri in the form of dividends or other profit-sharing mechanisms. The financial health and challenges of Ever After Foods could directly impact Pluri’s financial performance and, by extension, its investors. Essentially, your investment hinges on the success of two companies.

Ever After Foods

Ever After Foods has developed a patented bioreactor platform for cultivated meat production. This technology boasts a remarkable increase in productivity by more than 700%, positioning the company as a leader in cultivated meat technology.

Scalability is a significant challenge in the cultivated meat industry. Ever After Foods addresses this through its bioreactor technology, designed specifically for the sector, which supports the growth of high densities of cultivated meat at a large scale. This innovation enhances productivity and potentially aids in achieving cost parity within the industry.

The company has developed a first pilot-scale system and is working on a production system for licensing to other players in the cultivated meat industry. This strategy indicates a proactive approach to leveraging its technology internally and positioning itself as a critical enabler for the broader industry.

They have demonstrated the ability to produce significant quantities of cultivated meat using relatively small bioreactors. For example, they can make more than 10kg of cultivated meat mass with just a 35-litre bioreactor, highlighting the efficiency of their proprietary technology.

The company enjoys the backing of Tnuva, Israel’s largest food producer. This support is crucial for its vision to lead the development, production, and distribution of cultivated meat products at a mass scale.

The rebranding to Ever After Foods reflects a consumer-centric vision emphasising sustainable and ethical meat production. This aligns with the growing consumer demand for environmentally friendly and ethically sourced food products.

Pluri

The global biotech market, valued at USD 1.37 trillion in 2022, is projected to grow at a CAGR of 13.96% from 2023 to 2030. Pluri, with its PluriMatrix system addressing large-scale cell production challenges, is emerging as a key player in the expanding cell-based technology sector. This positions the company favourably in a growing market.

Investor sentiment towards Pluri, as reflected in Morningstar and Google Finance data, is mixed. This lack of clear sentiment may indicate uncertainty in the market’s confidence in Pluri’s initiatives.

Financials (PLUR) Stock Analysis

  • Net Loss: For the full year ended June 30, 2023, Pluri Inc. reported a net loss of USD 28.32 million, which is a decrease from USD 41.24 million in the previous year, indicating a narrowed loss by 31%.
  • Revenue and Revenue Growth: Pluri Inc. reported a revenue of $0.29 million in 2023, up from $0.23 million in 2022, indicating a year-on-year revenue growth of 22.65%.
  • Gross Profit: The company’s gross profit for the year was $0.28 million, which is an increase from the previous year.
  • Research & Development (R&D) Expenses: Pluri Inc. incurred $15.75 million in R&D expenses, showing a significant investment in research and development, which is critical for biotech companies.
  • Operating Income: The company reported an operating income of -$27.25 million, indicating operating losses.
  • Interest Expense/Income: The interest expense/income for the year was reported as $1.64 million.
  • Net Income: Pluri Inc. had a net loss of -$28.32 million, which, though a loss, represents a narrowing from the previous year’s loss of -$41.24 million.
  • Shares Outstanding: The basic and diluted shares outstanding were 37 million, which is important for understanding per-share metrics.
  • Free Cash Flow: The company had a negative free cash flow of -$23.12 million, and the free cash flow per share was -$0.63.
  • Gross Margin: Pluri Inc. maintained a high gross margin of 96.86%, which is indicative of the cost structure relative to revenues.
  • Operating Margin and Profit Margin: The operating margin was reported as -9493.38% and the profit margin as -9867.94%, reflecting the company’s current stage of development, in which expenses significantly exceed revenues.
  • Free Cash Flow Margin: The free cash flow margin was -8055.40%, which shows the cash burn rate relative to revenue.
  • EBITDA and EBITDA Margin: Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) were -$26.32 million, and the EBITDA margin was -9170.03%.
  • Depreciation & Amortisation: This expense was $0.36 million for the year.
  • EBIT (Earnings Before Interest and Taxes): EBIT for the year was -$26.68 million.

The 22.65% year-on-year revenue growth indicates the company’s expanding market presence. This growth, however, is countered by high R&D expenses, typical in biotech firms, meaning strong investment in innovation. Despite this, the firm faces large operating and net losses, although a decreasing net loss suggests improving efficiency. The high gross margin is a positive sign, denoting effective cost control in relation to revenue. Nevertheless, the negative free cash flow is a concern, reflecting a high cash burn rate, which questions long-term sustainability and underscores the need for ongoing funding. The very high negative operating and profit margins are alarming, showing expenses significantly surpassing revenue, which raises questions about financial stability. Similarly, the negative EBITDA and high negative EBITDA margin highlight operational difficulties, suggesting the company is far from achieving profitability. These factors together paint a complex picture: on one hand, there’s promising growth and efficient cost control, and on the other, substantial financial challenges.

These numbers are better than they appear; if anything, they paint a picture of a company with big plans and huge audacious goals. What you do with this information is up to you.

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