Agronomics Limited Company Newsletter

TIDMANIC

Agronomics Limited

22 October 2019

2.00pm 22 October 2019

Agronomics Limited

("Agronomics" or the "Company")

Company Newsletter

Set out below is a Company Newsletter available on the Company's website: https://agronomics.im/

This newsletter is the first monthly update Agronomics since the adoption of its new investing policy on 16(th) April 2019. Current and prospective shareholders alike are welcome to read our monthly newsletter, so they are up to date on the portfolio as well as any additional insights into and news about this immensely interesting space.

Agronomics' goal is to become a leader in the nascent industry of cellular agriculture, which includes environmentally friendly alternatives to the traditional production of animal-derived products. Agronomics is focused on companies with defensible intellectual property that provide scalable and commercially viable opportunities to improve the sustainability of traditional supply chains. This encapsulates technology within the food sector, such as the alternative protein space.

MARKET EVOLUTION

The team at Agronomics believes that disruption of the nearly US$ 7 trillion global meat, seafood and poultry market, primarily through the application of biotechnology, is one of the major secular opportunities of our generation. With the global population projected to reach 10 billion by 2050, and demand for animal protein growing at an even faster rate, the necessity to produce animal protein through more efficient means is clear. The scale of the challenge to feed the next 3 billion people, while also preventing potentially irreversible damage to the environment leads us to conclude that traditional farming/meat, cultivated meat and plant-based alternatives will co-exist in the future.

While these three methods are likely to co-exist Agronomics is focused predominantly on investments in cellular agriculture, which although earlier in the stage of development than plant-based alternatives, have considerably higher barriers to entry In the next five years, we predict a continued increase in popularity of meat alternatives, as they improve in taste, texture and price. We believe consumers are becoming more conscious of their food choices. Consumers are recognising the effect their plate has on the planet and health; traceability of food, animal welfare and carbon footprint size are important. The alleviation of animals from supply chains will extend out to the dairy and fashion industry, as the costs of animal suffering in industrial dairy farming and for leather goods become more apparent.

When cultivated meat launches commercially, we believe this will act to ease the pressures on both the land and our oceans. To date, the investments made in the entire cellular agriculture universe are below US$ 100 million with only six companies having closed Series A funding rounds. Wild Type and Future Meat Technologies both recently announced the close of their Series As. The sector is still relatively nascent and there are approximately 30 companies in the space looking to develop cultivated meat or seafood products. Companies in the space are adopting different approaches for their go-to-market strategy. Some companies intend to produce 100% muscle and fat steak like products that are identical in appearance, taste and texture to conventional meat, whereas others intend to combine their cultivated meat with plant-based protein to create blended products. It is of paramount importance that the first products launched are a success. We recognise the need for consumer acceptance in the space and the importance of governments supporting the development. It is likely that the USA, Singapore or China will be the first markets to have access to these products, as government regulation supports the introduction of the novel foods.

The plant-based sector is undergoing rapid expansion, with large, multinational corporations in the consumer goods industry shifting their product focus to incorporate plant-based alternatives. We have witnessed the release of plant-based products from Nestlé, Tyson Foods, Smithfield, Perdue Farms and Hormel. These are just some of the big meat companies diversifying their portfolios. The hype surrounding Beyond Meat and Impossible Foods as the 'pioneers' in the plant-based sector has helped fuel this sector, however the lack of price parity remains apparent. With scale and manufacturing expertise, we believe plant-based products will become as cheap as industry raised meat products in the future.

SUSTAINABLE DEVELOPMENT GOALS

Cultivated meat can support and accelerate meeting the Sustainable Development Goals - the United Nations blueprint to achieve a more sustainable future for all.

The effects of climate change are becoming more prevalent and recent reports support the true facts that the world is warming at an unprecedented rate:

   --      Goldman released a report on the effects of Climate Change summarised here. 

-- IPCC, the Intergovernmental Panel on Climate Change, released a Special Report on Climate Change and Land.

   --      UN released a landmark report in May: Diet must change to halt nature loss. 

The Teamexpanded in May, with David Giampaolo and Richard Reed joining the board as Independent Non-Executive Directors on the 31(st) . Richard was also appointed Non-Executive Chairman of Agronomics.

Richard Reed

Richard Reed CBE is the co-founder of Innocent Drinks, an international company producing fresh fruit smoothies and juices sold in various outlets globally, the majority of which was sold to Coca-Cola for more than US$ 500 million. Richard is also a co-founder and partner of JamJar Investments, a venture capital investment fund based in London, UK, specialising in early stage, high growth consumer technology and offline companies.

David Giampaolo

David Giampaolo is a major shareholder and chief executive of Pi Capital, a London-based investor club. He is also a noted entrepreneur in the global health and fitness sector. He has been involved as an investor, advisor and board member of some of the largest and most successful health and fitness companies in the world including Fitness First, 24 Hour Fitness, Zumba Fitness and SARVA, India's largest chain of yoga and mindfulness studios. David is also Chairman of SCA Investments Limited, the parent company of Gousto, a recipe box company, using technology to provide extensive choice and personalisation in an eco-friendly way.

Portfolio Updates

NEW AGE MEATS

Agronomics participated in New Age Meats Seed fundraising round for a 7% equity stake. New Age Meats is a cultivated meat company focusing on pork, based in San Francisco. This was an immensely positive and exciting investment for Agronomics to make as the team are highly supportive of Brian Spears, the founder of New Age Meats. Brian has a background as a chemical engineer, who moved into the cultivated meat space when he saw an opportunity to make meat that is 'healthier, tastier and more sustainable.' New Age Meats had a taste testing back in September 2018 and since then the team have been very R&D driven. They welcomed a new Bioengineer, Jonathan Parrish in early September.

BLUENALU

Agronomics has participated in both BlueNalu's seed and Series A financings, with the most recent investment made in August 2019. BlueNalu is a cellular aquaculture company based in San Diego, aiming to produce great tasting, healthy, safe and trusted seafood products that support the sustainability and diversity of the oceans. BlueNalu has an immensely strong founder team; Lou Cooperhouse, President and CEO, has 35 years' experience working in food service and retail operations and Chris Dammann, CTO, who is a scientific expert in the field. The significant experience and industry expertise of the team at BlueNalu is immensely valued by Agronomics.

BlueNalu's product focus is on finfish and crustaceans, they have developed stable fish muscle cell lines of multiple fish species, without the use of genetic engineering. Since August, BlueNalu have demonstrated rapid progress; they announced their strong commercialisation strategy and facility designs for large-scale production which will enable them to move towards their goal of becoming the global leader in cellular agriculture.

BOND PET FOODS

Bond Pet Foods is a pet food and cultivated meat company based in Colorado, founded by Rich Kellemann and Pernilla Audibert in 2018. The company is hugely promising to Agronomics, as Bond Pets is developing acellular fermentation techniques to produce chicken proteins with the appropriate amino acid profiles, to match current animal pet foods that will provide a slaughter-free alternative to conventional products. Bond Pet Foods is as far as Agronomics are aware, the only pet company that are focused on developing chicken proteins. Their products will eventually allow dogs and cats to receive the same or even enhanced nutritional content to maintain animal welfare and health. It is often underestimated or at least not known; the amount of animal slaughter required to produce meat that can be used in pet foods.

Bond Pet Foods was mentioned in Cleantech groups '50 to watch' report - companies offering high-impact solutions.

REBELLYOUS FOODS

Rebellyous Foods is a plant-based meat production company, based in Seattle. The company was founded by Christie Lagally, a highly experienced engineer, in 2017. Rebellyous intends to be a leader in plant-based meat production innovation, creates delicious, cost-competitive plant-based meat for the foodservice industry. Rebellyous team incorporates engineers, food scientists, and chefs, using quality plant protein, high-throughput manufacturing automation, innovative low-energy manufacturing tools, and uniquely designed modular production facilities to craft better tasting, more affordable plant-based meat. Rebellyous Foods is Agronomics first sole plant-based investment, which complements the outstanding cultivated meat portfolio.

VITROLABS

VitroLabs Inc is a clean cellular agriculture company creating slaughter-free, environmentally friendly leather in the world's first fully scalable tissue-engineering platform. Their technology works at the intersection of biology, material science, design and engineering to bring transformational change to the leather industry in a sustainable manner. VitroLabs was founded in 2016 by Ingvar Helgason and Dr Dusko Illic in 2016. Dr Illic is a highly experienced stem cell biologist who offers the technical expertise necessary for VitroLabs platform. The Agronomics team is hugely excited about the addition of VitroLabs to the portfolio and look forward to VitroLabs commercial launch in the future.

COMPANY NEWS

NEW HARVEST

The Agronomics team attended the New Harvest Conference in MIT on 19th & 20(th) of July. New Harvest is a non-profit organisation based in Boston. New Harvest (NH) is passionate about revolutionising the supply chain of animal-based products, for instance NH provided the laboratory of Mark Post, the scientific leader in the cultivated meat sector who created the first lab-grown burger in 2016. This was New Harvest's 4th conference on the cultivated meat space. Discussions regarding scale-up and bioreactor design were included. A highlight of the event was a talk from Scott Allen, a New Harvest fellow at the University of Bath, who discussed the various designs for cultivating meat. Other interesting observations included a mention on regulation in America for cultivated meat - it is jointly overseen by the FDA and USDA for cultivated meat, and solely the FDA for cultivated seafood.

GOOD FOOD INSTITUTE

Jim Mellon and the Agronomics team attended the Good Food Institute's (GFI) Conference in San Francisco on the 4-6(th) September. GFI is a U.S. based non-profit organisation founded by Bruce Friedrich in 2016, promoting plant-based and cultivated meat alternatives to products of conventional animal agriculture. The team had the opportunity to speak with Bruce and GFI's head of Europe, Richard Parr. GFI has recently launched in a division in Europe, and Agronomics looks forward to collaborating to raise the profile of GFI's work in Europe.

Chairman of Agronomics, Richard Reed, spoke on Vox Markets podcast on 11(th) September. He discusses the reasoning behind the latest portfolio additions including BlueNalu and Bond Pets, and why he personally no longer eats pork due to the cruelty that exists in traditional farming practices!

Agronomics was also represented at the 5th International Conference on Cultivated Meat held in Maastricht, Netherlands, on 6th-8th October. This conference was held by Mark Post, founder of Mosa Meat and the scientist responsible for the world's first lab-grown burger in 2013. Richard Parr, head of GFI-Europe gave a talk on how governments need to support cultivated meat in line of addressing antimicrobial resistance, climate change and the Sustainable Development Goals.

EXTERNAL RESOURCES

We have adopted new terminology to express the lab-grown/clean meat/cell-based meat space: cultivated meat. Labelling and consumer acceptance are vital for cultivated meat to have success in future markets. The sector is working very hard to ensure that cultivated meat has the appropriate language for it to be universally supported. This is a consequence of GFI's on-going consumer research to determine the best language to help people understand how the process works and its potential for food systems. Read more here.

Plant-based progress has been tremendous over the past few months offering alternative protein solutions:

   --      Impossible Foods have launched B2C in Wegmans, a U.S. grocery store. 

-- McDonald's have agreed to test a Beyond Meat burger called the 'PLT' (Plant, Lettuce, Tomato) in Canada.

   --      VBites launched a vegan Omega-3 supplement, V-mega 3, made from algae. 
   --      Sunfed, a New Zealand-based brand launched in over 250 stores in New Zealand and Australia. 
   --      KFC Beyond Meat Fried Chicken launched in Atlanta. 
   --      The Meatless Farm Co. secured an equity deal with Channel Four. 
   --      Lewis Hamilton's Neat Burger Restaurant opened serving Beyond Meat. 

Cellular agriculture, and the terminology surrounding it, can appear unfamiliar to many. There are some useful resources available online should the reader wish to delve further:

-- Elliot Swartz, Academic Research Advisor at GFI has a comprehensive report on the science behind cultivated meat, read here.

   --      GFI: An analysis of culture medium costs and production volumes for cell-based meat 2019 
   --      Rethinkx report on 'Rethinking Food and Agriculture 2020-2030' 
   --      GFI's plant-based and clean meat MOOC 

SOCIAL MEDIA COVERAGE

Agronomics was briefly mentioned in The Telegraph's technology section on Sunday 29(th) September.

Agronomics were pleased to announce the launch of their new website in August.

A monthly blog post on Master Investor on the clean and cultivated meat sector provides a brief discussion of the topical matters within the space:

   --      August update: Clean Meat - the future of our food? 
   --      September update: Clean Meat: regulatory approval may rule this race 
   --      October update: Cultivated Meat: Climate Change, the presence of Plant-Based Food & Science 

Follow Agronomics on twitter: @AgronomicsLtd

Visit Agronomics website at: https://agronomics.im/

For further information, please contact:

 
 Agronomics Limited       Beaumont Cornish        Optiva Securities        Peterhouse Capital     Britton Financial PR 
                              Limited                  Limited                  Limited 
     The Company               Nomad                 Joint Broker             Joint Broker         Investor Relations 
                      -----------------------  -----------------------  -----------------------  --------------------- 
     Denham Eke         Roland Cornish/James         Jeremy King             Lucy Williams           Tim Blackstone 
                               Biddle 
 [phone]    [phone]     [phone]     [phone]      [phone] 
 

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October 22, 2019 09:00 ET (13:00 GMT)