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I have been monitoring BSF and the placing last week, raising £2.9m at 17p to fund organic growth (see link below) is the catalyst that makes this one to put on the radar now that the funding raising is complete and the company is on the cusp of generating revenues. The company is currently progressing an OTC listing in the US as well to open the potential investor base.
From its website: “BSF Enterprise, the owner of pioneering UK-based clinical and cellular agriculture company 3D Bio-Tissues, is unlocking the next generation of biotech solutions. It is achieving this through an acquisition-led growth strategy to drive the development of lab-grown tissues. Cell-based tissue engineering can generate cultured meat, lab-grown leather, human corneas, collagen growth and skin substitutes. This technology will contribute to a radical transformation of the delivery of sustainable solutions across a variety of sectors.”
The current narrative on the company is driven by cultured meat. In contrast to plant-based meats, the company has developed a product called City-Mix which is an animal-free cell growth agent for culturing muscle and fat cells which for lab-grown meat and leather production. They have also produced and ‘tested’ a full meat fillet with a further showcase event scheduled for April. 3DBT has secured its first agreement after completing a successful evaluation of City-Mix and has engaged with over 60 Cellular Agriculture companies, of which 26 have progressed to new business opportunities. Of these 22 are currently evaluating the product, of which two companies have completed successful evaluations and are expected to begin purchasing in April 2023. This link provides a good summary from the CEO on the potential for the market:
https://bsfenterprise.com/wp-content/uploads/2023/03/What-is-lab-grown-meat-Final-V58094.pdf
In addition, the company is progressing its cornea transplant where it states there are 12.7m people awaiting a transplant, and skin-care products giving it 2 other potential markets in life sciences.
This is obviously an early stage and risky investment. While there is the potential for being a pioneer in the cultivated meat space, where they ‘grow’ actual meat without the huge environmental impact of animal production, the alternative view is that the environmental impact of lab grown meat isn’t much less, that people will always want real meat and governments will act to protect their farmers. As a counterbalance, there is a huge global population requiring protein that there is enough of market for lab grown meat alongside current levels of real meat to make the investment interesting. One to watch.
Valuation assumptions: Taking McKinsey’s £25bn market size estimate for 2030 and assuming BSF claims just 0.5% of the market (£125m rev) at a 0.5x EV/Rev multiple gives a value of £62.5m, or 73p per share. For a risk price we simply assume zero for maximum conservatism in the margin of safety price, assuming all products fail to develop commercial success.
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