Moolec Science SA (MLEC) 2024 Q3 法說會逐字稿

Good morning, and welcome to the Moolec Science's third-quarter 2024 conference call. My name is Bill Zima of ICR - Strategic Communications & Advisory. During this conference call, all participant lines will be muted until the management's remarks when there will be a question and answer session, please also note that today's session is being recorded today, Moolec announced its third quarter fiscal year 2024 business highlights.

Document is now available on the company's Investor Relations website at ir.moolecscience.com. This morning you'll 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 limited to statements 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 Slight 3, I would like to turn the call over to Moolec CEO Gaston. Please go ahead.

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 the Piggy Sooy.

Second, Amit Dhingra Chief Science Officer, will walk you through our highlights on Safflower Platform. 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's 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 the 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 came 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 Moolec all again, creating value for the shareholders and the planet at the same time, while we write in the history of biotechnology with this approval, USDA-APHIS, our RSR has then been Piggy Sooy unlikely to post increased plant as with related to non-engineering Soybeans, does give it more like a green light to mobile and ship our products without individual patents relating to the APHIS regulation.

For those new to the story, more like develop a unique and patented soybean platform technology under the trademark Piggy Sooy, our scientific team has achieved a high level of expression of animal meat proteins in soybeans where they fit and exhibited forcing protein expression levels up to 26.6% over total Sooy products.

Now turn to the next slide. So we can share with you. One we understand Piggy Sooy, is relevant for our plan in Poland. We went daily with the mission to create putting radios that can make a positive impact from the food industry environmental footprint and further strengthened for security. First of all, the industry is already growing in soybeans in order to feed pigs.

And our then is lottery to produce processed meat products and cuts of meat. Roughly one acre of traditional soybean can feed 10 pigs can be used for livestock to produce these livestock. It is estimated that more than 60,000 liter of water are required and that the process produced around 550 kilograms of CO2 equivalent emissions.

Now talking about movement. In contrast, if we achieve to form one acre of Piggy Sooy, we think it 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 petrol 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 our Piggy Sooy platform why we are confident it is a market potential going forward.

This is currently how the industry works has highlighted in the previous slide, the industry consumes a significant amount of soybeans used as animal feed to support livestock later slaughtering for me, the industry is also using traditional soy protein ingredient, which are genetics or commodity plants use US meat extenders of feeders in the processed meat products such as sausages, burger, nuggets, meatballs, dumplings and so on.

By the way, these kind of products represent 70% of that trillion dollar global mid-market. That's huge, $700 billion market. The traditional soybeans protein ingredients contained no meat flavors and other meat properties when compared to meat, I need to be mixed with extra ingredients, mostly chemical, Colleran and flavouring in order to provide different functionalities to processed meat products.

By the way, I am very well acquainted with these traditional meat industry since I part of the fourth generation of all of the larger process meat players in South America.

So now let's talk about Moolec, what Moolec will offer, Moolec will leverage commodity supply chains, introducing science at the beginning of the value chain of new ingredients for food companies. Remember, we had thought we would see how we will do this. While Piggy Sooy will be a unique product used as a meat replacement as an ingredient with a higher level of nutrition could potentially boost the same content, flavor and color as to meat, as a result, food processors could replace part or eventually all additive new for color and flavoring as well as real meat from us rather houses. Now I leave you with Amit Dhingra, our Chief Science Officer will provide an overview of Moolec Science and begin showing milestones on top of that SAP Cloud Platform highlights, Amit over to you.

Thank you, Gaston, and good morning to everyone. As critical as our regulatory approval milestone as 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 supplant transformation, state 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 USDAs, we started field trials at three different locations in May 2024 with fourth generation seats. 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 stage. In February of 2024, we started trial production of GLASO at our toll processor facility as we optimized process to produce roughly five tons of material.

We developed pre-commercial collaborations. We began planting in April and May 2024, we have successfully contracted 600 acres of production with key growers to plant class seats for crushing purposes. We have additionally contracted another 60 acres, which have been planted for seed production. We expect to produce roughly 200 to 400 tonnes of Safflower during this production season shortly before the year ends, we plan to harvest crushing 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 US patents were granted for SPC2 these patents, extend the protection of our technology and processes that were used. We increased the expression levels and sunflower seeds until 2041, building up on our intellectual property portfolio as one of the strategic pillars and movement 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.

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 would provide our stakeholders with a more comprehensive understanding of the evolution of the business, given that year-over-year comparisons offer a more stable view of the company progress.

Keep in mind that all figures mentioned today are in US 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 IAS 29, 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 deal to close to $1 million, resulting in a gross margin of around 18% of 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 noncash 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 cash utilization has decreased from $4.2 million in Q3 2023. Given that this quarter, we have had significantly lower cash payments associated with lifting 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 life and upgrading in place with Moolec.

We are very pleased with how well it continues to deliver significant milestones such as the USDA-APHIS, regulatory approval on the Piggy Soo, 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.

Thank you, Jose. And at this time our management will be taking questions. (Event Instructions)

Before we take questions from the live queue, we have received a few questions, the 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? And what's next and the opportunity you see?

Well, thank you, William. Hi, everyone. Thank you for joining us today. A pleasure to be here with all of team from both a very, very good question, we are really happy of being first molecular farming company by achieving this kind of USDA approval, the US government and under the ACC telling us that there's no as such, it best risk in planting our animal proteins on US soil.

I'm very happy that William, I think, personally that you could see these achievements beyond [bonus] and I'm quite proud of Amit Dhingra and Martin Salinas and [Hoogenkamp], on the two old and male team achieved these great milestone because I personally believe this they are right in the history of biotechnology.

They are locking in some way Moolec farming food by getting the kind of approval. So what's next well, in terms of operations, field trial, we are planting as we speak. You saw in three different locations in the United States without permit because now it's approved some that will that will bring a lot of information in terms of product development in terms of the next step in terms of a regulatory front that will that will be FDA.

So we have already started conversation with the FDA. So we quite understand how the FDA works and why I'm quite optimistic about how our regulatory team works. So really looking forward to continuing providing information to regulators.

And I'm pushing this product from a bunch of seats, so for some time, some commercialization. So thank you for your question. And I'm again, I'm very happy and I take this opportunity to congratulate Moolec team for these great milestone. Thank you.

Thank you, Gaston. On 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?

Sure. I could do that while, yes, GLASO pre-commercialization stage sheet, some a type of a story of customers for GLASO G&A will be on bet dietary supplementation, say a company that provides a dietary supplement ingredient company that blends nutritional oils portfolio make a fix that G&A GLASO also make a break. It's very complementary to the EPA and DHA omega-3 oils and nutritional beverages will be another application as well specific to that applications.

So our customers and potential customers are all around these category of products and these ambition to ship before Willy on the question that I don't know who is healthy. But with asking being better and this is true, we are very close to here with the market with GLASO.

We are planting around 600 acres in Idaho US. For commercial purposes and active conversation with customers to keep the market, hopefully by the beginning of the year. But the first part of the 2025 calendar year.

So we are working hard to deliver for like some. It's 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 there are opportunities quite widely.

Great, thank you, Gaston. On Piggy Sooy, what can you expect commitments from customers? Have you had feedback from potential customers so far?

Good question. Well, it's hard to say a specific timing of them, customer commitments. But I can I can say that we are reaching a very good feedback from potential customers and different stakeholders that are very interesting in receiving samples of Piggy Sooy actually.

And we have already started delivering some samples but then as we grow it had too many clinics seats to crash and deliver samples. So we are actually multiplies here making a seat increase. Actually, this is happening as we speak, as I described in our free trials, we are also increasing the seats to get more have more [tease] to crash, prepare samples for potential. Well, again, it's a science-based company, but definitely reading on the plane ingredient business.

And that's how they be in patients where you need to deliver samples. We'll work with established players. It goes well with the R&D departments make there and that relationship based disease, not just platinum place, you need to go where things are way with the with the customers in applications we are in great conversations on Piggy Sooy, but that's so a step back.

Okay. Thank you, Gaston. Now we're going to take our first question from the live queue. The first question comes from Thomas McGovern - Maxim Group LLC

Thomas, at this time, we do ask sorry, we had to interrupt, but I still have scope for June racing is done from the beginning of the earnings call. I'm sorry, Thomas, but I will refer to we'll prioritize as Scott question, if you don't mind willing.

Okay, that's fine. We can go we'll take Thomas next.

Scott Fortune, ROTH. Please mute your line and proceed.

Thank you. Thank you for the questions and 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, the dietary supplements.

I know you've given out a number of samples and deliver to kind of those different companies' budgets? A little more color on how those conversations, what's the feedback for ahead of this GLASO. So you still looking to commercialize this in early 2025 here that maybe that would be helpful from that standpoint? Thanks.

Sure. Well, good question, Scott. Well, unfortunately, I can't reveal names now about or these are potential customers. But what I can say is that we are in some cases working as to our close offtake agreements on some commercial agreements.

And so that will come for sure. And that's part of the of the commercial conversation. And that's definitely the outlook and that more like needs to actually progress and move forward with the commercialization of this product.

But then what I also can say about Piggy Sooy to the show this interest is coming from multiple ways of us so on, we are focusing on all in case of a 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 as for fees for pet foods and for some other applications as well. Peak output goes to consequence. So we are also receiving interest from different other industries as well.

Again, we are prioritizing food. That's where our focus. These are now bottom, as I said before, I know it's quite down. I want to talk now GLASO soil progress, our GLASO well, yes, probably will. We will keep you updated very soon in the following items, business updates, earning calls.

Appreciate that. Thanks. And then one more question for me is dual input from providing a little color around the (Inaudible) one thing, the scale-up process here and timing to arrive. I can the characterization prototypes to achieve regulatory compliance is kind of an update on that side of the business from your aspect here?

Sorry, I didn't understand the question, could you please come again Scott.

Around the (multiple speakers) We'd get an update that is a little more color on that achieving regulatory compliance as you move forward. Just a little bit of help from that standpoint.

Sure. Yes. Well, yes, one is on track. We use our business update to talk deeper about Pier one. We are right now multiplied and no sorry, is it would not be my plan will be scaling up, brought up with our partner group. We should.

And in Europe, we are you've seen their facilities to scale-up these products and that scale-up station will also bring samples and information for regulators to in the United States, quite similar to Piggy Sooy. So we are in multiple fronts with regulators, open channels to provide information and from both products and these moving that way nicely.

But we need to respect the regulatory pathway on the framework on and then quite happy of how our regulatory team internally more like we've done care on some advice regulatory advice are of a full team. It is our low end handling all the different multiple regulatory fronts where we are one.

So on this goes in parallel, we probably will we will expect some resolve not talking about regulation, but that took overall in that product, the usual years could eventually go faster than planned well, because this is a constant control environment and plants you need to in terms of not you need to respect my allotted time, the campaigns and the multiplication by more well, I will not say easy but faster to scale up in liters in a controlled environment than in the open field

So, but I will summarize my answer to yes, one. And so we are moving forward with FDA in parallel with open channel providing formation, all the things that we are doing now to two fine-tune product development, gather information to provide for the regulators to be met.

Thank you and congratulations again, the FDA and really moving molecular farming forward for the industry. I'll jump back in the queue. Thanks.

Thanks so much, Scott.

Thomas McGovern, Maxim Group. Please unmute your line and proceed. Thank you.

Hey, guys. So a lot of my questions were addressed. So I just wanted to focus now kind of taking a step away from for move back and looking more at Argentina's economy as a whole right now. So in April, for the first time in six months, Argentina achieved 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 trend of declining inflation rates to materially impact move that moving throughout the calendar year and then into 2025. Thank you.

Well, thank you, Thomas. And I saw that you skip the previous question because I have already addressed it. So I'll thank you for that. Well, I will leave the floor to present to explain and talk and the deeper in the inflation rate and actually the business before that, I can say that partially the inflation going down for sure.

So 8.8 should be crazy, but the comparison was with the with five months with the floor in our DCs, definitely going down our President. I'm saying now where because [Heiner], I'm personally not convenient science lab, our precedent now is in the US, you know, expanding the network for investment and actually been a source of good momentum for the country now, but definitely the main topic should be our inflation and how they are there. We are coming economy recover.

So as I said Jose, please go ahead and get deeper into Thomas' question.

Sure. Hi, Thom, thanks for the question. So look, we'll have GLASO on lower operational, our presence in the US, in Europe and in Argentina as well. So that provides some level some exposure to the Argentine FX movement and inflation as well.

So a host of that and our business present in Argentina has, for the most part, our revenue is denominated in USD. So from that perspective, no inflation movement should 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 on that in our plan to our cost structure. So concept, I will say the following either when there's a devaluation of the Argentine peso and that has some positive impact on the cost front for us, even though we have some costs that are made in that business when there is inflation where there's high inflation in all that kind of raise our cost denominated in Argentine pesos a bit.

So it all in all comes to what is how a and devaluation and inflation move along. If devaluation is higher than inflation, then that has some positive impact on our cost. Inflation is higher than devaluation that kind of it as some potential, a higher cost on our P&L. But again, our costs denominated in Argentine pesos is a small part of our overall cost structure.

Now looking forward, what can we expect? It is too soon to tell, but we are seeing it advise you on devaluation of the Argentine peso, more than 3% per month.

Okay. Under the strong declining inflation from 25% at the beginning of the year, now falling to single digits. So see if things continue this way, you should see a match between inflation and devaluation. So that provide a stable and some stability in real terms for the local currency. Hopefully, I answered the question, Tom.

Yes, that responses very helpful guys, will jump back in the queue. Thank you.

Okay. At this time, it appears that there are no further questions. Therefore, I'd like to turn the call back over to Moolec CEO Gaston for some closing remarks.

Well, thank you, Williams. Well, I really want to thank Catalina Jones Chief of Staff & Sustainability Officer. So for handily, all done is great business update from our side and also thank the ICR team to help us as usual. Also, of course, thank you all you're on the audience for joining us on today's conference call. Thank you for that. We are very, very happy. As I said before, I'll say it, USDA approval, more like these, definitely a flagship molecular farming thesis of growth of that time.

And I am also happy that the Moolec are providing value, but only for the shareholders and all the stakeholders are Moolec for the planet because if we follow Piggy Sooy and in this definitely could be very beneficial for our planet in terms of carbon and water footprint.

It comprises of livestock and believe that's where I'm coming from my name Paladini, one of the most famous ad meat brands in Argentina and very well acquainted with the traditional mis value chain. I'm very proud of my family business, but we need to understand we need to find alternative solutions.

We produce the same mining, but proteins and meat proteins with science and technology to overcome their 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, I will share this copy, as I said, to share with you. These are solid execution of the Moolec, the team. So we will we continue working hard to step ahead for sure. A big thanks also to our partners to our investors and the analysts that are following us on phone and for all our supporters and followers.

And thanks again for joining us today, and we look forward to updating you in the next quarter for sure. Well, having run a wonderful day or wonderful afternoon for our European followers. Thanks.

Thank you all. You may now disconnect.