September 12, 2022 – On today’s show we welcome special guest, Moolec Science founder and CEO Gastón Paladini. Moolec is a science-based food ingredient company that is going public through a merger with SPAC LightJump Acquisition.
On the show, Gastón discusses:
- What is molecular farming and how did it originate
- How they produce meat molecules with plants
- Why meat alternatives are necessary
- His biggest challenge as an entrepreneur
- And more
Welcome investors to The Absolute Return Podcast. Your source for stock market analysis, global macro musings and hedge fund investment strategies, your hosts, Julian Klymochko, and Michael Kesslering aim to bring you the knowledge and analysis you need to become a more intelligent and wealthier investor. This episode is brought to you by Accelerate Financial Technologies. Accelerate because performance matters. Find out more at accelerateshares.com.
Julian Klymochko: Welcoming Gaston from Moolec Science on the show today. Gonna talk about everything that’s going on in plant-based and in alternative meats and all the innovation happening in food today. So, Gaston joining us from Argentina, how are things down there these days?
Gaston Paladini: Hi, Julian, thank you so much for this opportunity to talk about Moodlec Science and alternative protein landscape. If you know, but I’m based in Argentina because I’m part of mid family business, that’s Paladini Group. The brand of the company is my last name, the last name of the whole family and I’m four generation. And I have been investing in the traditional meat industry, my whole life.
Julian Klymochko: So traditional farming, you raised some cattle, slaughter them, chop it up, cook up the meat and eat it. Now there’s this new concept molecular farming, which is basically, you know, dramatically different, a lot of complex PhD stuff happening in the lab. So ultimately, what is molecular farming and how did it originate? Like where did this come from?
Gaston Paladini: Well, molecular farming is not a new technology. Actually, have more than 25 years. But in the pharmaceutical industry, mostly vaccines using plants. So Moolec Science is pioneer by using this technology in food. And the reason why, we use this technology is because allow us to, by the using of scientific techniques, engineer plants directly with foreign molecules and we use plants as bio reactors to produce meat, protein genes. So, see it this way you could produce with scientific approach animal proteins without using animals by different other technologies. For example, microorganisms with big tanks and bio reactors in labs, or you could use plants as small factories as bio reactor. And that’s what we use. We insert directly the specific animal protein genes that improve taste, flavor, color, and nutritional values. And we insert it directly in the genome plants of the main crops used in food, such as soybeans and peas by the combination of these two sources.
We could get these animal proteins totally necessary in food by with an affordable and scalable solution by combining with this crop. So, we use traditional farming. At the end of the day where we have. Where modifying, just seeds with animal protein genes inside. Then the crops grows, keeping the original proteins of the plants, take soybeans. We are engineering soybeans with meat, protein genes inside. So, our crops grows with the original proteins of the soybeans and also with animal protein genes to skip [Inaudible 00:3:37] though, to skip the feed process and go directly into food, to get a better soy, protein, concentrate for the plant-based industry. So we are focused on the upstream on the IP and on the technology to get these new seeds and also to the ingredient, to the final ingredients, to commercialize our future product directly to food producers and ingredient companies.
Julian Klymochko: So, I had never heard of molecular farming prior to researching Moolec Science. So, it’s a concept that’s totally new to me. So, was wondering if you could explain it to us from, you know, you start with your inputs and you get your outputs, how can you produce meat molecules with plants? It’s not like all of a sudden, this bean stock will grow to a beef Patty [laugh]?
Gaston Paladini: Well, see this way, is just a code. You insert a code of these genes, of these molecules directly in the genome of the plant. So, you give the information to the plant to produce these foreign molecules inside the plant. So that’s how our technology works. If you see this way, the molecular farming original technology was for vaccines and the farming was not with F, with ph.
Julian Klymochko: Oh.
Gaston Paladini: For farming, for farmer. And then, the industry started playing with words by using F because at the end of the day, what you use is a traditional farming to grow your crops with this specific molecule inside beans, is totally disrupted now, but in food. And that’s why Moolec is really pioneer, is a first mover and now will be in public markets by using this technology in food.
Julian Klymochko: So, it’s effectively taking gene editing from the pharmaceutical industry and applying it to food. Now I was wondering, you know, how do they come out of this? Like, for example, a soybean, what does it end up versus a regular soybean? Does it look the same? Does it taste the same? Does it just have a different molecular makeup with say a higher protein content or things of that nature? What is the difference between a molecular farmed plant and just a regular one?
Gaston Paladini: Well, actually what we are modifying is the protein. We are working in the protein content of the plant. We are not increasing the amount of protein of the original amount of protein, but what we are doing is substituting a part of the soy proteins with animal proteins.
Julian Klymochko: Oh.
Gaston Paladini: So, for example, a regular soybean has between 35 and 40% of protein content. Of that protein content, a significant part of that protein will be animal proteins. So at the end of the day, the crashing and the separation of the oil, the start and the milling and the proteins, you could recover not only the soy protein that is totally necessary for food, for example, to make plant-based burgers.
Julian Klymochko: Mm-hmm.
Gaston Paladini: As a TVB of the plant-based burger as a substitute of meat, but you could also recover that same process, the animal, the real protein genes that could help to replicate and improve the flavor, taste, color, and nutritional values at the end of the formula that. Right now, what is happening is that most of the food producers are using synthetics or different other, who knows, ingredients to mimic the meat flavor of who knows what, we are eating. So, what we are doing is, we are giving back the real animal process into the equation by using this technology, but with a more sustainable, affordable, and a scalable way by using plants.
Julian Klymochko: Ah, that makes sense. Now, in terms of the development of Moolec technology, you’re saying you’re fourth generation of this business down in Argentina. Now, was it developed within that over time? And now it’s spun off as a separate entity? How did it come to be?
Gaston Paladini: Well, no, this is a spinoff of Bio Service group. Bio Service is a biotech and agricultural company with operations in Argentina, South America, United State. So, Moolec is a spinoff of both bio service by expanding the technology in food now. Also, Bio Service was the first company to achieve [Inaudible 00:8:44] protein in a plant for the food industry. And that was, let’s say, our proof of concept. After our spinoff, we transferred that platform technology and that proof of console into Moolec. And we started using that experience, team Ip, to expand the technology to alternative meat. Our first product, our proof of console was plan based [Inaudible 00:9:14] is a govern protein for the cheese industry. It’s a very small market, very specific one, but it’s a very interesting molecule for validation. [Inaudible 00:9:26] was the first molecule approved, by the FDA in the nineties for precision fermentation technologies. Moolec teams achieve the same with plants by using safflower. Safflower seeds is a marginal crop very similar to soy. So that was our proof of concept. And we demonstrate that is totally feasible to use plants as small factory to produce animal produce. So, then we say well, why don’t we start using that experience and platform with a much, much more interesting total addressable market opportunity by combining meat, protein genes with soy. Truly, you know, that, soy is the queen of crops. It’s a big market. It’s the best meat analog. And there is plenty of experience by engineering crops with GM traits for different other reasons. So we say why don’t we use the soy platform with a different combination and another learning from the proof of concept was that it makes sense to combine these proteins, animals and plant proteins and try not to spent a lot of money by recovering and concentrating the animal proteins and separating both by combining meat, protein genes with soy makes sense not to concentrate the meat proteins, because at the end of the day, the food producers need both to formulate a plant-based burger.
So, we have a hybrid approach without animals. So, it’s animal free, it’s quality free, it is a hybrid approach. It’s difficult to call it because at the end of the day, who knows what is bigger now with science? You know, if we are replicating nature by using science and the bigger movement do not eat meat, well, this is a totally new thing. So that’s why we believe this is definitely an opportunity as a category creator, because we are creating a new definition here. Well, if vegan people do not eat meat because they don’t want meat, that’s one thing. This could be a meat product, but if you are not eating because they don’t want to harm animals and they want to give their part to the world by produce by consuming this product in a more sustainable world. But this definitely sustainable, and we are taking the animal out of the equation completely because the only thing that we are actually inserting is a code. We are not using animals, but it’s the same code that the animal produce daily.
Michael Kesslering: For molecular farming, how does it differ from other solutions in the space for plant-based foods such as fermentation or cultured meat and other options like that?
Gaston Paladini: That’s a very good question. We believe that molecular farming should be. And actually, I believe is right now because we are not allowed here. We are pioneers, but not alone. That should be the four technological pillar in alternative product. After plant-based, fermentation and culture meet, this is a very similar approach compared with fermentation. But it’s totally different by using plants and non-micros, but partition fermentation delivery, right. There engineering, micros, and microorganisms. They’re modifying microorganisms to get protein of choice, by using a control environment, bio reactors in labs, and then to scale, it is quite a challenge because you need big tanks to similar as what the pharmaceutical industry use. Well, molecular farming use plants as small factories. And the infrastructure is already there. Soybean growers are already there. They are growing seed for feed. See it this way. You know, like the more than 80% of the soybean of the world goes to feed, to feed animals. And between 20 and 10 goes directly into food as an organic non-GM product, but it’s not good enough because we need more. So, what we are doing is engineering that soybeans to skip livestock, to skip feed and go directly to food with a more nutritional and better product. But the growers are already there. It’s just a matter of switching seeds. They hold infrastructure. So, they there, so that’s the beauty of our technology that the only thing that we are actually modifying is just the seed with our IP, with our patterns. So, then the biology does the rest, the current infrastructure, do the rest. The only thing that we are actually modifying is that would be a blend, would be a hybrid product at the end of the day. And we could have a better product for future customers.
Michael Kesslering: And so, if I understand correctly, you could use different plants as your your input, but you just so choose to use soybean because it already has all of the infrastructure built around it, and it doesn’t require a major change by growers.
Gaston Paladini: Well, soybeans are our core platform. Yeah, for sure. There is bunch of reasons why we chose soy. But we are also modifying peas. Peas is a very good mid substitute as well. Peas do not have a good amount of protein is at least half percent of soy, but this is still a very interesting and good meat analog, and there is like a movement by no use in soy. And some, there are some other markets that prefers peas, so we diversify our molecular formula approach, and we start to modifying both, but for sure, soybean is our core technology, our core platforms, but again, and you say quite well, we could modify different crops as well. And we are thinking of starting different other processes because there is no limit what molecular farming could do.
Julian Klymochko: I wanted to touch on this from a macroeconomic perspective, just the basic ideas, you know, why are meat alternatives necessary? Could you talk about some of the tailwinds behind your business? Is it an environmental thing because as I understand it, molecular farming and meat alternatives require much less water, friendlier for the environment or is it you’re seeing larger trend of more vegetarians, more vegans. People just looking to eat less meat or is it, you know, a multipronged thesis providing these tailwinds for the business?
Gaston Paladini: Well, what we know is that we are expecting that molecular farming could help the environment three different ways. The first one is that we are measuring less use of land and that’s a lot. So that’s definitely an ESG approach, a sustainable approach. But that’s part of the vertical, that’s part of the industry by escaping the livestock. That’s one thing. The other thing is that what we are seeing now is that when alternative protein industry started the novelty, the innovation was just to get plant based, just to get an alternative and that’s it. Now, this is alternative and by using plants, that’s great. That’s absolutely great. But we believe that it is not good enough because it’s quite difficult to mimic the mouth experience and the nutritional values.
Nature is just one. The nature says that the best proteins are the egg proteins, the meat proteins, the meat proteins, and the fourth position are the plants. You could substitute a product, but you can’t match it. It’s quite difficult to match nature. So, by the only thing that you could match nature is by using science and technology. So that’s the main difference compared with plant based. So, I believe that plant based made a great thing to create the market, to educate the consumer, to educate the big players. Now is time for Moolec and a bunch of great scientific companies by start using scientific techniques to replicate what natures do best. And on the other side, we know that the vegan vegan market is still a niche and probably will stay as a niche.
Julian Klymochko: Right.
Gaston Paladini: The big market here is the people that is cautious about the environment.
Julian Klymochko: Yeah.
Gaston Paladini: That they want to balance their diet, but they are very, very aware of what they are eating, and they want to balance their diet during the week.
Julian Klymochko: Mm-hmm.
Gaston Paladini: And that’s a very, very big market. That market is growing [Inaudible 00:21:10]. So, I’m not vegan. I’m not the typical alternative protein founder that is against the traditional industry. Because of where I come from of course, and at the same time, it’s because it’s quite impossible to substitute all, let’s be honest, it’s one trillion market. And what the projections are saying is that this will get at least 100 billion in 2030 or so [laugh], and this is one trillion. So, this is a huge market. But what we could do is to boost the system is to help the system, because what is wrong here is, not wrong, but at least what is harming the environment is how the system works. And I think that probably we are not going to be alive when new disruptive technologies will substitute, [Inaudible 00:22:25] bring a whole animal, but what we could do now is to use the science that is available now and had already proved that works to produce different things, to use it in food. And that’s what we believe what we should start doing is like to educate the consumers and timing is great for this. To educate consumers and their whole landscape that we need to use science to overcome the major challenges in the food system, because we are right now in a food crisis because of Ukraine and Russian war, because of inflation. So, there is plenty of food security issues, and the people is really concerned about it and what we believe by the using of scientific approach, we could overcome that challenges the same, what the science done with the pharma needs and see what happened with coffee.
Julian Klymochko: It’s a really good point in terms of consumer preferences. It’s really a balancing act because as you indicated, it’s difficult to match nature and consumers are looking for that nutritional value provided by meat and mouth experienced taste, et cetera. And nature makes a pretty darn good steak. So, from your perspective, where is the technology now and where do you expect it to go in the future? For example, someone like myself, you know, I love steak and you being down in Argentina, great beef down there, I’m sure you enjoy it as well. How long will it take to have, you know, a solid alternative to a great medium or steak from molecular farming?
Gaston Paladini: Well, very difficult to match a good Argentinian steak
Julian Klymochko: [Laugh] or something else, maybe sausage or bacon or chicken or whatever it is?
Gaston Paladini: See it this way. Let me give you some numbers. Close to 70% of that trillion of meat is processing meat.
Julian Klymochko: Right.
Gaston Paladini: 30% is the stake.
Julian Klymochko: Right.
Gaston Paladini: The nature.
Julian Klymochko: Yeah.
Gaston Paladini: The 70% are processing meat. That’s burgers, sausages, nuggets, cold cut products, et cetera.
Julian Klymochko: Right.
Gaston Paladini: 70%. And that’s 70% that’s processing meat. That’s what I really know because that’s my family business. We are the largest processing meat players in Argentina. And I really know how to make cold cut products, sausages, burgers, and so on. And that processing meat industry is a mix of ingredients. You use meat, you use fat, you use plant proteins, you use water, you use oils, you use a specific additive. It’s like cooking, huh? It’s a recipe. You need ingredients.
Julian Klymochko: Mm-Hmm.
Gaston Paladini: This is not you. This is how the industry works, huh? The substitutes, the big players. That’s what people is eating now to get that trillion as a whole market. So, my point here is, what Moolec farming is doing is not trying to replicate the 30% of the steak. That’s a small market. I really like to do it, but there is some other scientific companies trying to replicate the steak, quite difficult to get it.
Julian Klymochko: Yeah.
Gaston Paladini: But I hope that they could get it. But what we are doing is like disrupting and putting all our our focus on the 70% of that trillion, by getting the commodities of the future, the plant-based ingredients, the future by combining these meat protein genes with plants and we expect to supply these big processing mid players with a better ingredient. So, maybe it’s difficult to understand the business because we are B2B. So, our focus is on the ingredients.
Julian Klymochko: Yeah.
Gaston Paladini: By the best way to see it is that if you take a burger, 50% is water, and let’s say a plant-based burger, 50% is water. 40% is TP, is like a texturized vegetable product. So, plant proteins and the other 20% is oil and specific additive to mimic experience. And what Moolec is doing is playing in that 50%, the TP, because we are engineering soybeans and peas and that metrics of plant protein are already there in our crops and our ingredients and the specific additives by using nature and not a black box of who knows of ingredients. So, see this why it’s a great, great big, big term. And we are focusing on the big part, the big piece of a pie.
Julian Klymochko: And so totally logical to be focusing on the process meat, as opposed to, you know, a nice fancy steak. I’m sure it’s much easier to replicate the process stuff. Now you’ve taken this company very far on the verge of becoming a publicly listed. As an entrepreneur, what has been your biggest challenge in taking the company this far?
Gaston Paladini: Well, the biggest challenge is always people, huh? It’s like to get a good team. Lucky for me. I have a great, great team in Moolec. I would say that you need to have the resiliency when you start the business. You need to understand that this is not easy, and you need to work hard. And especially when you create something new. So, to get people that really believes that intrinsically believe in what you are doing is key, right? Because you are living their life here to disrupt, to create something new. And when you create something new or you need to understand that people may not, that the markets is not expecting you. You need to create.
Julian Klymochko: Right.
Gaston Paladini: So, when I started Moolec and I started talking about modifying plans with animal protein genes, the people started saying, what are you doing?
Julian Klymochko: [Laugh].
Gaston Paladini: And now, maybe not outside the alternative protein landscape, but inside our internal industry, people understand what we are doing. People know that Moolec, and there are other companies in molecular farming putting on the table a different approach. But it’s tough, you know, because you need to work hard internally to get your science works and at the same time to convince the people that what you are doing is feasible and could help third parties to improve a final product to create a business. So, lucky for us Moolec has a great team now. I have people that really knows how the traditional value chain works. That’s key for me because we have a B2B model. We are disrupting the industry from the instant. We are not saying the traditional value chain is wrong. This is alternative. What we are doing is co-working with the R&D department of established players. So, we believe that it’s faster and it’s a better way to co-work with established players. And that’s why we focus on B2B. And as I said before, most of alternative protein companies are B2C.
Julian Klymochko: Right.
Gaston Paladini: They focus for so many years to create brands. And that’s great for us because they pave the way of our IP, our technology, and our future ingredients.
Julian Klymochko: That’s certainly a concept that makes a lot of sense that has multiple tailwinds behind it. The goal of being more environmentally friendly, you know, less killing of animals and, you know, just trying to have a healthier diet. So that makes a lot of sense. And it sounds like you’re doing amazing work at Moolec Science to figure out that massive issue, because I’m sure it is not easy. Molecular farming, creating something, brand new, trying to create a product and a market for it. Now, just one last thing, before we let you go Gaston. What time do you wake up? And what’s your favorite productivity hack?
Gaston Paladini: Please repeat me the last question.
Julian Klymochko: What’s your favorite productivity hack? You know, what do you do that makes you more productive?
Gaston Paladini: Well, the first one is 6:30.
Julian Klymochko: Okay.
Gaston Paladini: Between 6:30 and seven. And the second one is to be with my kids.
Julian Klymochko: Okay.
Gaston Paladini: At the end of the day, what I do is for them, you know, I see it this way. They are the fifth generation of the traditional meat industry. So, Paladini kills close to 10,000 pigs per week. So, I really want an alternative, not an alternative meat, also alternative answer for my kids. So, they’re very little right now, but I really want to tell the whole story here, say, okay, this is the family business. We are proud of it, and that’s fine. We are not against, but at the same time that create this sustainable approach, because I want to live a better world when I go. So that’s why my kids are my motivation. I have a double motivation here.
Julian Klymochko: [Laugh] and perhaps in 35 years, we can have the fifth generation, the next CEO of Moolec Science on the podcast when they’re taking over the reins from you. But thank you so much Gaston for coming on, explaining molecular farming in the future of the alternative meat segment. Certainly, very intriguing and a lot going on there. So really appreciate your time today and wish you the best of luck.
Gaston Paladini: Thank you. Have a good one.
Julian Klymochko: All right. Take care. Bye everybody.
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