Industry Leaders Interview with Rom Kshuk of Future Meat Technologies

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Israel is turning into something of a hotspot for cultivated meat businesses and Future Meat Technologies is in the vanguard of this fast-growing sector.

Based in Rehovot, the company has raised $42 million so far, with blue chip investors including global food giants Tyson Foods, Muller, and ADM. Aquaa Partners and FutureFoodFinance founder Paul Cuatrecasas recently caught up with company CEO Rom Kshuk to discuss regulator change, lowering the cost point for meat alternatives and the Israeli ecosystem.

Paul Cuatrecasas 

I think just to start out, how do you typically describe Future Meat Technologies to others who don't know the company?

Rom Kshuk 

So yeah, I'm Rom Kshuk, the CEO of Future Meat since its establishment. Basically, Future Meat stems out of The lab of Professor Yaakov Nahmias in the Hebrew university of Jerusalem. He's the founder, president and Chief Scientific Officer of the company. The idea of cultured meat is that you can take a biopsy out of an animal and create the raw material for the meat industry or for making meat products without harvesting or slaughtering animals. That's basically the idea. This is really about how do we feed a growing population. There are estimations that in 2050, there will be about 10 billion people on the planet, we can't support this growth in population with the way that we currently produce animal protein. It's not efficient from biological point of view and it's not sustainable. We don't have enough land, we don't have enough water. And obviously CO2 emissions are impacting the temperature and the environment around us. So, this is part of the motivation behind why we need cultured meat and Future Meat is really spearheading this. How do we take this technology that has been designed and matured for the biopharma industry, for vaccine production, immunotherapy etc. and move into the food world? That means lowering the margins, lowering raw materials costs, releasing some of the regulation barriers, and basically enabling this technology to become commercially viable, and even achieve cost parity with the traditional way that we currently produce meat. It's important to state here that obviously it depends on what country we're talking about, but the meat industry as a whole is very efficient. Future Meat was established with this commercial cost as its’ key target, and today we can say we have developed proven patented techonologies that  enable us to produce cultured meat in large volumes at low costs, while delivering the great  taste and nutrition and the complete experience that we're looking for in a meat product. There are currently about 55 companies in this space, and each one of us is focusing on a different technology, on a different market segment. But for us, the drivers here that enable us to be unique all evolve around unique technology; which relates to the type of cells that we're growing, the engineering process that we're utilizing, and how we scale, and scales is important today, becasue, as far as taking this mind blowing or science fiction technology and turning that into a consumer friendly product- we have already did it. Now the name of the game is production in cost and scales that can be commercialized.. Now the question is let's start developing real industrialized products. Let's start having burgers or sausage or a kebab or a chicken strip, or whatever it is. I think the next stage is really understanding the market segmentation, understanding who are our consumers? Why are they interested in purchasing cultured meat? What are the drivers that sets their purchasing decisions? And we can obviously get a piece of this puzzle by looking at  what happened with the novelty plant-based meat alternative market. We've seen Beyond and Impossible Foods make a big move here and create significant growth in this market. We have been learning from them, who's the consumer and what they're looking for, and how to track flexitarians. We deliver a different promise and experience, and I would even dare say a better experience for meat lovers, but I think that this could be an interesting first point of view in understanding how to grow and educate this market.

Paul Cuatrecasas 

Rom, one of the questions I have is around regulatory and FDA. I would imagine it's a critical path item to get regulatory approval before any of this can happen. Can you talk about that at all, what the status is either, ideally directly for Future Meat technologies or in general in the industry?

Rom Kshuk 

Yeah, sure. So, the FDA and USDA have defined responsibilities for cultured meat. The FDA will do all the work we call the ‘op stream’; how do you produce the cell-line? How do you grow it in a bioreactor? What's their media composition? And then in the harvest step, it turns into a USDA responsibility. Basically, it turns into being the raw material, meat. That's a traditional USDA responsibility, on toxicology and pathogen presence and how you label, temperature control and distribute the product. That's what's going on between the agencies, so it probably will be both of them. This is just referring to the cell culture of mammalian and avian, if we're talking about fish, or if we're talking about seafood, that's only the FDA. As the global and American market in specifics shows high and increased intrest in cultured meat, I suspect these discussions to take place very soon.

Paul Cuatrecasas 

Do you see the regulatory agencies as a major obstacle to getting a Future Meat Technologies product to market by 2022?

Rom Kshuk 

It is not an obstcale but it is a challenge. I'm sure that we'll get the approval, but it might take some time. Now, I do think that the FDA and USDA are in open and good communication with the industry. We've been talking to them. I know that other players have been talking to them. They're trying to facilitate what the industry is looking for, as far as guidance, inspections, understanding the timeline and being transparent to investors and potential collaborators. I am assuming that 2021 will be a year that will have some submissions of initial dossiers that will review all the information that the companies have on cell count, on the production, on the biology side, on the engineering time etc. And that is when the FDA would need to start making decisions. Would that happen by the end of 2021? I don't know 100 hundred percent, but I am assuming this will happen in 2021. As far as submission, and more concrete discussions by the companies, there’s a lot of questions here. How can the FDA or USDA allow us to start testing our product in the market without approval, for example? That’s another issue. I don't believe that the regulation would keep being a bottleneck here for many years to come, the more that this industry matures, and gets a better understanding and better line of technology, we answer more and more of their demand. If we look at broader territories, there are a lot of territories that are very interesting, Singapore being one of them. Singapore has set a goal of producing most of its protein domestically which is a challenge when you don't have a lot of land. I'm not even talking about animal farming, I'm even talking about regular farming. So, I think they have a lot of government support for this. We're trying to find other friendly territories as far as regulation goes. To summarize, regulation is a critical milestone here. I think it will be solved in the next couple of years, but let's see because there's no checkboxes that we can check and say, “Okay, we're done, now, we can market the product to consumers.”

Paul Cuatrecasas 

Do you think there is a prospect that by 2030, the process will be so refined and improved, where the cost really does come down to even $2 a pound or less for very high quality meat that tastes great, and that is safe for the world and is interesting to everyone, so that, by that point, you'd have to ask, why would you eat meat from an animal? I mean, do you see that? If you talk to the leaders of the Beyond Meat and Impossible Foods, they're very clear that by 2030 there's no point for anyone to eat anything but plant based meat, which you would expect them to say that, but we know that technology now more than ever, is advancing at exponential rates. Do you see the exponential impact of advances in technology supporting and assisting Future Meat to get to that point in 10 years time where if the US has a problem with any of this it doesn't really matter, because the rest of the world will see that this is a no brainer? I call it going from the horse and cart to the automobile, it'll just become so obvious by 2030, that this is a no brainer, then it really does start to change the world. Do you see that exponential effect being possible for Future Meat Technologies over the longer term?

Rom Kshuk 

The easy answer is yes, which you would expect from me. There are a few issues here, first of all, looking at the equivalence of Moore's Law, I would expect to see here that basically the cost will reduce in the next few years from thousands of dollars per kilogram, to something that is much more affordable. This is really about scaling up, and looking at this from the inside I think this is starting to be a question of scale more than technology. Obviously scale takes time, even if we raise half a billion dollars tomorrow morning, and we start building thousands of bioreactors and producing volume, it doesn't work that way. It will take time, we need to learn how to scale up. But my answer is yes, I think that you would see this technology evolve and get to a point that it's commercially viable and competitive to what you see in the market. I believe that this is not only a question of will the technology be able to deliver on scale and price? I think this is also a question of, are there enough consumers? And what's the narrative that we're building for this? Because when you're talking about Beyond and Impossible, I agree with everything that they're saying. But I don't see them being at a point that even in 10 years, people will stop eating meat. Maybe I'm skeptical, but I think there's a barrier to plant-based technology reaching the right mouthfeel and I think for us, there's less of that barrier. I think it really depends on what the experience is and can the technology deliver that. It depends on who your customers are and how open they are to this. For me, cultured meat could be bigger revolution than plant-based meat. Again, I'm not trying to say that this is the only technology that could do that, there are others, synthetic biology is one example. But I do see those types of technologies and all the food space being significantly different than what we know it to be right now or what we've known it to be five years ago.

Paul Cuatrecasas 

How do you see the differences between Future Meat Technologies and the other ones that are out there? You mentioned 55, but some of the bigger ones, people are talking about Memphis Meats and Meatable, Aleph Farms, even Mosa Meat just raised over $50 million and secured investment from Bell Foods. Is there anything you can say about Future Meat Technologies that you think is exciting, different and special? Is there any reason why you can scale faster, or have a greater prospect because of the technology being a bit different?

Rom Kshuk 

So, I'll separate my answer to two layers, one is the technological layer, the other is what's going on in terms of our building an ecosystem. So on the technological front, we have been focusing on a more efficient type of cells, and to give you the high level here, we're talking about a type of cell that can grow almost twice as fast, can grow in a lower cost of medium and can get to a significantly higher cell density. What we're doing is that we're taking connective tissue from different animals, it could be pork, lamb, beef, or chicken. which is a more efficient cell source. We're not manipulating their genome in any way, this is a non GMO cell-line. On the engineering front, we are optimizing our process with ability to recycle the nutrients that the cells are using, and we’ve also optimized our bioreactor design to enable us to scale up in a more efficient way at a lower cost. So, that's kind of a vertical of the technology.

On the market approach or the building the ecosystem, we've come to this with an understanding that nobody can do this by themselves. It doesn't matter how much money you raise, this industry is so large, and the value chain here is so significant. This can't be just Future Meat or Memphis Meats or other players doing it by ourselves. From the get-go we’ve been building an ecosystem around us of incumbents that are interested and capable of helping us. So that started with Tyson, being one of our early investors, and we've added ADM, that's Archer Daniels Midland Company, one of the biggest food ingredient companies, who are able to help us on the feeding the cells side, but also on building the final product together with plant-based protein and combining it. Then on the production side we have also recently added two big investors, one of them being Muller the German dairy giant, which is interesting because there’s a lot of resemblance between dairy production and cultural production, especially in the processing of dairy. So, we've been building around us a very capable ecosystem that could enable us, first of all, to start and deliver nutrients to the cell and then move that on to productization and marketing the products, and also producing them in large scales.

Paul Cuatrecasas 

And the technology can apply to almost any kind of meat? Not fish, but beef, chicken, lamb, pork? So those are all within the prospective capability of the company?

Rom Kshuk 

Yes.

Paul Cuatrecasas 

Let's just touch on this a bit about ecosystem, and the supply chain, etc. I'm interested in your view on these partnerships, because ultimately, industries have gravitated to those who own the intellectual property. One example that comes to mind is GM, in the automotive industry, when they realized back in 2013-14, that within 10 years the majority of vehicles, passenger cars, trucks, vans etc. would be not driven by human beings with petrol but self-driving electric vehicles. They determined that the best way to get there, as a company, would be not to try to do it all in house, but to acquire the company at the time in 2016, that they believed had the best self-driving software technology, which was Cruise Automation. They paid over $600 million for a zero revenue company at the time, based on that future vision because GM recognized that they didn't just want to be a distributor, as an existing player, for somebody else's technology. Do you see that evolving in this industry? Not overnight, not in two or three years but 10 years from now that the larger players some of whom you've mentioned and others who are out there investing in some of your competition or peers, do you see incumbents facing a similar prospect that they could end up becoming lower value, commodity-like distributors? If they don't actually own the intellectual property and the technology that creates the core product like they're doing today? If they own the meatpacking plant, and if they own the process, and if Future Meat Technologies is essentially replacing the meatpacking plant? Does that actually give them a problem whether they're partnering with you or not?

Rom Kshuk 

So that's a good question. At the end of the day, we're talking about a consumer product. We're not selling or aiming to sell ingredients to food companies. So, I would claim that this is really about would those companies own significant branding or a presence in the consumer mind? I think that would be one of the most important things. Would they become just a supplier? I'm also thinking that this won't happen in a day or two, I think that it will take years to get to the production volume that somebody like Tyson has, but I do see a transition here that other incumbents could be interested in purchasing these kinds of technologies or a company. I would even claim that until the cultured meat companies get to the market, go through regulation, have some validation from the market, meaning not three people in a video saying this is tasty, almost what Beyond and Impossible are doing right now, creating significant revenue, adding to food services or retailers in large volumes, not incumbents volume, but still, in significant enough volumes, I'd say that I don't see that happening. Once we get that validation, which I’d say we're three to five years from. I'll say that we're one to two years from launching product with three to five years from getting this kind of traction in the market, then I would assume that you'll see the big incumbents coming in and saying, Okay, I'm willing to pay for what you're doing, or I want to purchase your technology, or I want to license it. Obviously, nobody wants to be the horse of this industry, when everybody comes in with cars.

Paul Cuatrecasas 

We know that regulation is a bottleneck. But what would you say is the number one obstacle, knowing what you know, now and having a couple of years under your belt and some good funding and good partners and good traction? But what would you say is the number one thing that keeps you up at night and that could get in the way?

Rom Kshuk 

I'd say scaling up. You have to understand that most of the companies have been built as R&D organizations, and we need to make that transition into a food company, somebody that knows how to produce, somebody that understands the consumer, somebody that talks about marketing. And that's really down to almost pivoting the resources, and here I'm talking about human and financial, to build a new skill set for us. So this is kind of on the corporate strategy, corporate development side On that operational side, that's production and scaling up, how do we take what we've been doing in the lab in the pilot and starting to scale up to get to commercial volumes, that again, enable us to reduce the cost?

Paul Cuatrecasas 

So, it's really execution? It's not technology. It's not having to prove that any further apart from getting through the regulatory process, it's really execution. Taking this product from the lab to the fork, that's really the challenge?

Rom Kshuk 

Yeah, correct.

Paul Cuatrecasas 

And how many staff are there now at the company?

Rom Kshuk 

So, we're at about 40FTEs. We're growing. I think that when we talked before, we were just two people. Obviously this organization is mostly R&D, let's say 80% of the of the current employees are R&D people, that means that we have about 10 PhDs, ranging from cell biology, molecular biology, biochemistry, chemistry, food engineering, engineers, process engineers...So we've a very interdisciplinary team and a very interdisciplinary company, because we think that in order to have the most efficient solution to this, we need to have an holistic view. We can't just say, "Okay, we'll do this component, then wait for somebody else to reduce the competence of the nutrients", for example. That doesn't work, at least not at this stage. When we grow, and we get to the market, and we have some more validation, then we can talk about reducing the cost and staff specializing at specific components that would be more relevant. But as far as getting to the market, enabling us to have caught up to the market. I think this is what we're aiming at. And we're growing.

Paul Cuatrecasas 

This is phenomenal progress, in two years, getting that level of staff, not just the right people, but the mix of all those people, that's not easy to do. That's what the pharmaceutical companies do, right? That's their challenge, they need to bring a mix of all different types of scientists from all different disciplines and have them work seamlessly together in drug development. Would you say there's a similar challenge you have there to get all the right skills and talented people together to work together on this one mission?

Rom Kshuk 

Yeah I think it depends on building the right culture. You have all the science side, biology, chemistry, but then there is the food side of this. You have the chefs you have the food engineers, the people that know how to do to taste testing. I really believe that our industry is similar to biopharma as far as building a culture of interdisciplinary human resources and having open discussion between disciplines. On the other hand, this in the end needs to be food, this is not something that you validate through clinical trials, this is something that you taste, that you smell, that you experience. So, there's a bit of a less scientific side to this as well.

Paul Cuatrecasas 

How would you define the culture? or describe it?

Rom Kshuk 

We look for people that are hungry to know that this is a good opportunity to build their career, that this is a good opportunity to impact the world, food consumption, meat consumption. Somebody who think outside the box and not see things as "we're just all optimizing existing markets". Also foodies, they like technology, and think that we can change something significant here and make a difference. I don't want to use cliches like saving the world, but we're here to make a difference. We're here to do something that can impact the ability of the next generation to live here in the same way that we do and get to consume the same products that we all love and cherish.

Paul Cuatrecasas 

Interesting. And what would you say is the next step for the company in terms of what's the next major milestone?

Rom Kshuk                                                                                                                  

The next milestone is having the first market launch, at least in one territory, potentialy in a food service. I'm not talking about hundreds or thousands of restaurants, I'm talking about 20, 30, 50, but getting through all the hurdles of regulation, production, distribution, finding who are our consumers, getting through all this process, getting good product, somebody's having a bite somewhere in the next 12 months. It's either US or locally here in Israel or Singapore. That's our milestone and next step.

Paul Cuatrecasas 

OK so that's the clear focus now. That’ll require hiring and partnerships, presumably, as you describe them, with industry to help you achieve all of that. And you feel confident in the business plan, it’s been tried tested, due diligence done, and you're ready to go?

Rom Kshuk 

Yeah, that's a good question. I can say that I'm confident but it's a plan until you get to market. So, about your point of validated, obviously, it's not validated. I think that we have a good plan. I think that we have a line of scientists solving all those issues, I think that we're building the commercial side of the business that would allow us to have a better understanding of all the downstream applications. That's kind of our current focus right now.

Paul Cuatrecasas 

Yeah. heads down now, execution. Is there anything that I haven't asked you that you think I should have asked you? Anything that maybe I'm missing that would be interesting for food industry executives to know about future meat technologies or your mission or something else that you can imagine being relevant?

Rom Kshuk 

I can say that this understanding of the need for building an ecosystem is the biggest issue that is missed. Because once we or other companies have finished through all the technology and has gotten to an engineering and optimize engineering process, the right cell-line, regulation, all that. I don't think that a Tesla-like play here would be effective. This is such a big (market), and I'm not only talking about the volumes, I'm also talking about the value chain that is needed as far as producing the inputs, having them in food grade and not farm grade, meaning reducing the cost of the nutrients that we supply, the cells, for example. This really requires building an ecosystem that is significantly larger than what exists right now around cell culturing. I'm not talking about food, but if we're trying to leverage what the biopharma industry has been doing right now, it's not relevant at scale. It's not relevant, because of the volumes required. For example let's say hundred million litres of cell culture media is produced every year by the big players in this space like Merck. Just to capture 5% of the beef market in the US, we probably would need about 100 times more than that. So, just to give you a scale of what this means, and what I mean, by building an ecosystem. Building an ecosystem is not, let's have two or three players around the table telling us a nice idea and developing some nice products. This would be building new businesses here or transforming existing businesses to other focuses. I think one message to players in this space, is that there is a lot of opportunities in building a new ecosystem here, which might be even bigger than their existing businesses.

Paul Cuatrecasas 

Yeah, even to the extent that if the incumbents who are, for example, meatpacking operations, see this, then they could convert their existing operations to being a partner of Future Meat Technologies and ultimately even have a better business than they have today from an economic perspective?

Rom Kshuk 

Correct.

Paul Cuatrecasas 

Yes, that's very interesting. Thank you, Rom, extremely interesting. I'm really pleased to hear the progress, you're making truly phenomenal progress. Thank you for your time today.