The court handling a high-profile lawsuit* filed by bioreactor supplier ABEC vs foodtech co Eat Just and its GOOD Meat cultivated meat subsidiary has issued a ruling on a flurry of counterclaims from the defendants, siding with Eat Just/GOOD Meat on some matters and with ABEC on others.
ABEC, which has been working with GOOD Meat on pilot cultivated chicken facilities in California and Singapore, signed an agreement with the startup in August 2021. Under the seven-year deal, ABEC would design, manufacture, install and commission 10x 250,000-liter vessels— “the largest known bioreactors for avian and mammalian cell culture”—for a large-scale facility in the US.
By November 2022 however, Eat Just/GOOD Meat was recommending “a phased approach” given ongoing “financing hurdles,” and the two parties started corresponding over amendments to the above agreement, said Judge Wendy Beetlestone, J in an order filed with a court in Pennsylvania last last month. “The relationship soon turned rancid.”
In early 2023, ABEC sued Eat Just/GOOD Meat alleging breach of contract and failure to pay its bills on time, while Eat Just/GOOD Meat responded with counterclaims, arguing that the parties never formally ratified amendments to their original agreement, and that ABEC had simply proceeded as if they had.
According to Judge Beetlestone’s April 30, 2024 ruling:
Breach of contract counterclaims: Here the judge sided with GOOD Meat and Eat Just, which “have sufficiently alleged that they paid pursuant to the agreement, that the agreement entitled them to certain property, and that no property was delivered to them.” As a result, GOOD Meat and Eat Just’s counterclaim for breach-of-contract (failure to deliver) can proceed, said Beetlestone.
Conversion and replevin counterclaims: Here, the judge sided with ABEC, and dismissed claims from GOOD Meat and Eat Just that certain property resulting from the deal with ABEC belongs to them, and that ABEC is unlawfully maintaining possession of it.
Request for declaratory judgment counterclaim: Here again, the judge sided with ABEC, and dismissed GOOD Meat and Eat Just’s request for a declaratory judgment stating that the amendments to the parties’ agreement were never properly executed, and are therefore not binding.
Eat Just/GOOD Meat declined to comment on pending litigation, while ABEC did not respond to a request for comment.
Eat Just CEO: Large-scale cultivated meat production requires a new operating model
Speaking to AgFunderNews in March, Eat Just founder and CEO Josh Tetrick said he is “not attempting to raise money for a large-scale cultivated meat facility right now” and is instead focusing on process development at the firm’s plant in Alameda, California, and working on new cell lines he claims will enable more efficient large-scale production.
The firm has not sold any cultivated chicken to US consumers following a small-scale test last summer at a restaurant run by Chef José Andrés, but will keep selling the product in Singapore albeit on a tiny scale, said Tetrick.
Asked what had changed since Eat Just and ABEC announced plans to build a large US facility in 2022, Tetrick said: “Certainly the funding environment is a part of the [challenge] but even if the funding environment were perfect, we would have made that decision [to revise plans for a large-scale facility]. We just realized there’s a more efficient, a better approach. But we don’t have all the answers yet.”
For profitable large-scale production, he said, “Ultimately, you need to build such facilities for under $200 million and be able to operate at significantly less [cost] than the current operating model. As we were working on [plans for] the [large-scale US plant], we realized that the capex costs and the operating costs were significantly higher than we felt made sense for us and also for the industry [according to court filings from ABEC, such plans were “likely to cost more than $1 billion”].
“We think it is necessary to have a large-scale facility that ultimately enables us to do tens of millions of pounds of chicken, beef and pork,” added Tetrick.”But we have to be able to construct and operate that facility at a significantly lower cost than previous assumptions.”
Large-scale production would also likely deploy more efficient CRISPR-enabled cell lines that will proliferate indefinitely and thrive with fewer, cheaper inputs, he added: “More likely than not we’ll also use another cell line [rather than the spontaneously immortalized chicken fibroblast line in the company’s initial US regulatory filings] when we’re in large-scale production.
“It is more likely than not that a CRISPR-enabled cell line will ultimately be necessary and we’ve been working on that for 3+ years and made some real advancements in cell density on those lines and being able to use fewer, less costly components. There’s a lot of R&D work that goes into it and that’ll be a part of future regulatory filings.”
A new operating model
Asked about progress Eat Just has made on developing a new operating model, he said: “Everything is being rethought from the design of the bioreactor and the supporting equipment, to the overall setup of the facility, the number of steps in the facility overall, to the piping, to the maintenance, to the drainage. You can look at this through a biopharma lens, a food lens, and an industrial fermentation lens, and we are taking learnings from each of those areas.
“We’ve begun to see the beginnings of a path of how you can build these facilities at a much lower cost, but I’m not saying we have some perfect plan. There is still a lot of work to do and there are still a lot of uncertainties.”
‘We’re not attempting to raise money for a large-scale facility right now’
As for investment in cultivated meat, which fell 78% in 2023 versus 2022 against a backdrop of a 49% drop in agrifoodtech investment overall, he said, “We are not raising money from people who otherwise would invest in savings bonds. They know there is uncertainty, but if it ends up working out, there’s going to be a significant return on their capital. That’s why you invest in any early-stage technology company, and cultivated meat is no different.”
*The case is ABEC Inc vs Eat Just Inc, and GOOD Meat, Inc, filed in the Eastern District of Pennsylvania, 5:23-cv-01091
Further reading:
Eat Just CEO: Large-scale cultivated meat production requires a new operating model
