CULT Food Science Corp, an investment platform which focuses on clean, lab-grown food, revealed that it has struck a binding Letter of Intent (LOI) with Cella Food Systems Inc, to accelerate its cell-based product development capabilities through Cella's patent portfolio, machine learning data and prototyping IP toolkits.
The Vancouver-based company said it continues to build “defendable moats” around its leading cellular agriculture (CellAg) intellectual property (IP), patent and investment platform through the commercial agreement.
"CULT has long recognized that the goal is to build a CellAg ecosystem, not just a portfolio of investments...The company's trusted relationship as an investor and partner across many verticals allows it to bring to bear, where applicable, its own platform technologies to aid and augment its rapidly growing investees,” CULT President Lejjy Gafour said in a statement.
READ: CULT Food Science completes seed investment in precision fermentation dairy firm De Novo Dairy
“This is expected to ultimately result in multiple future revenue and royalty streams for CULT as it contributes not just capital, but also cutting-edge technologies across its portfolio. This is the first step in the company's strategic plan to harness the upside of the nascent cell-based foods markets not only as an investor, but as a principal."
Gafour noted that the move would lay the foundation for “mutually beneficial” R&D collaborations as it moves towards becoming a top provider of cellular agriculture IP, machine learning and breakthrough science around cell-based foods.
“This access gives us a first-mover advantage that we will work to strategically leverage across our portfolio companies as well as to protect technological CellAg superiority,” said Gafour. “We look forward to rapidly deploying Cella's IP and patents across our ongoing initiatives."
Transaction terms
According to the LOI, CULT and Cella will exchange CA$300,000 worth of common shares, with the shares being valued as follows:
- Each of CULT's shares will be valued based on the volume weighted price of CULT's shares on the Canadian Securities Exchange (CSE) for the 15 trading days prior to the date of execution of the definitive agreement, subject to the minimum price per share allowed under the policies of the CSE;
- CELLA's shares will be valued at a CA$10,000,000 pre-money valuation.
The shares issued by the parties under the share exchange shall be subject to resale restrictions in accordance with applicable securities laws. In addition, the CULT shares issued to Cella will be subject to a voluntary six-month hold period.
In addition, Cella will grant CULT and its current or future subsidiaries, a 15-year license to utilize all Cella's intellectual property on the day they sign the definitive agreement, including Cella's patents, under preferential commercial terms to be further defined in the License Agreement.
Cella's patents were developed by leading synthetic biology scientists and experts from MIT and Yale University. The development of Cella's foundational portfolio was led by biotechnology food expert Dr Kate Krueger, who has a Ph.D. in Cell Biology from Yale University and an A.B. in Biochemistry from Mount Holyoke College.
The IP focuses on methods for producing novel proteins from fungal cell lines. Moreover, Cella's machine learning data aims to help transform food systems with more cost-effective manufacturing processes with fewer resources.
The fungal cell line methodologies patent portfolio includes the following potential capabilities:
- Lab grown collagen - Proteins with multiple health boosting properties including optimizing immunity and maintaining skin health;
- Bleeding feature in meat - Proteins that make cell-based meat bleed like animal-based proteins;
- 3D scaffold - Creates structural elements for use in cell-based meats for a more realistic mouth feel through supporting muscle, fat and tissue development; and
- Peptides: A method for producing mammalian cell adhesion properties on cell surfaces; used to improve structure in cell-based meat applications.
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
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