By Thomas Kerr, CFA

NASDAQ:MITC

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MeaTech 3D (NASDAQ:MITC) reported 1^st quarter 2022 financial results on May 31, 2022 and results were largely in-line with expectations. Quarterly EPS was a loss of ($0.04) which matched our estimates.

Research and development expenses came in at $2.1 million during the quarter which was below our estimates of closer to $3.0 million. The 90% increase from the prior year quarter was due to the addition of the company’s Belgian subsidiary (Peace of Meat) as well as MeaTech’s higher level of investment in its cultured meat technology capabilities.

Marketing expenses totaled $1.1 million which was above our estimates largely due to higher levels of stock compensation. General and administrative expenses were $2.1 million in the quarter which was a 23% decrease from the prior year quarter. The decrease was primarily due to lower stock compensation expenses which was offset by higher Director & Officer insurance expenses.

Operating loss was ($5.3) million compared to ($4.2) million in the prior year period due to the increase in operating expenses mentioned above. Cash flow used in operations came in at ($2.8) million and capital expenditures totaled $800,000.

Cash and cash equivalents totaled $15.3 million compared to $19.2 million at the end of the 2021 fiscal year. The company has no outstanding debt and no major liabilities with the exception of ongoing lease obligations.

During the quarter, MeaTech made significant announcements and updates regarding the company’s technologies and other business development progress.

In February, the company announced the successful development of a new technology process where muscle cells are fused into significant muscle fibers that better resemble those in whole cuts of meat. Bovine stem cells were isolated, proliferated in the lab, and differentiated into matured muscle cells with improved muscle fiber density, thickness and length. MeaTech has filed a provisional patent application with the USPTO.

In March, the company moved to new headquarters with state-of-the-art laboratories in Rehovot, Israel. That area is considered the epicenter of Israel’s food-tech sector. The new space allows the company to improve on its cultured meat R&D and 3D bioprinting technology as well as continue to grow the biology and engineering teams. The new headquarters also features a tasting kitchen.

During the quarter, MeaTech announced that its wholly owned Belgian subsidiary, Peace of Meat, will build an R&D facility and pilot plant in Belgium, with construction expected to start in 2022. The new facility will expand and accelerate the company’s cultured avian technology and R&D capabilities.