Vancouver, British Columbia--(Newsfile Corp. - February 14, 2024) - Burcon NutraScience Corporation (TSX: BU) ("Burcon" or the "Company"), a global technology leader in the development of plant-based proteins for foods and beverages, reported results for the fiscal third quarter ended December 31, 2023.
Operational highlights for the third quarter ended December 31, 2023:
During the quarter, Burcon:
- established commercial production capabilities via integration of proprietary processing equipment at partner manufacturer's facility;
- entered into production agreement with partner manufacturer;
- received significant interest from former Merit customers for Burcon's pea and canola proteins;
- entered into an agreement to access second $5 million tranche of the $10 million loan from its largest shareholder;
- showcased its 95% hempseed protein isolate at SupplySide West tradeshow; and
- received significant customer interest for its hempseed protein isolate.
Management Commentary
Burcon's fiscal 2024 third quarter and year-to-date showcased robust execution and value creation, marked by the achievement of three significant milestones. These included validating demand from former customers, executing a production agreement with our partner manufacturer, and building out commercial production capabilities for Burcon's portfolio of protein ingredients. As we implement our capital-light business model, we anticipate revenue from our hempseed protein sales, introducing additional protein products to the market, and completing further production campaigns to meet growing customer demand.
Due to strong customer demand, Burcon and its partner, HPS Food and Ingredients, accelerated their plans to commercialize hemp protein. As a cornerstone in our Burcon 2.0 capital-light business model, we entered into a production agreement with our partner manufacturer to produce Burcon's best-in-class high purity protein ingredients. By leveraging the existing infrastructure of our partner manufacturer, Burcon believes it can rapidly bring production capabilities online to commercially produce its 95% hempseed protein isolate, as well as launch additional protein products into the market. During the quarter, we successfully established a supply chain for our hempseed protein isolate by integrating our proprietary equipment in our contract manufacturer's facility. We successfully completed water test runs that met the process parameters of Burcon's hemp process. We expect to begin commercial production this quarter, with additional production runs slated for the first half of 2024.
In conjunction with building out our supply chain, we conducted conversations with many former Merit Functional Foods' customers, as well as new, prospective buyers to determine the interest for Burcon's pea and canola proteins. The overall interest in our pea and canola products has surpassed all our expectations with nearly 100% expressing interest in evaluating and/or purchasing. In fact, many companies are having difficulty identifying replacement ingredients with equal performance in their end consumer product applications. We are excited to receive this level of direct customer feedback and are actively exploring how we can meet a portion of this demand.
Burcon also announced that it has entered into an agreement with its largest shareholder to access the second $5 million tranche of the total $10 million loan. Subsequent to quarter-end, Burcon drew down $1 million of the second tranche. We are grateful for the ongoing support from our long-term shareholders as we work towards becoming a market-leading protein ingredient company. Concurrently, our funding application to Protein Industries Canada, in collaboration with consortium partners, is expected to be approved in the coming weeks for a co-investment on a $7 million project to commercialize hemp and sunflower protein.
We believe we are on track with the execution of our capital-light Burcon 2.0 business plan, with opportunities to further accelerate the plan through launching multiple proteins in parallel. In calendar year 2024, we expect our primary objectives to include hemp production and sales, the introduction of additional protein ingredients, and the continued scaling of commercial sales. We believe the market presents a ripe opportunity for disruption and our new-to-the-world protein ingredients are poised to tap into a multi-billion dollar addressable market where consumers demand superior products. With a laser focus on generating revenue and creating value for our shareholders, 2024 is anticipated to be a transformative year for Burcon.
Financial Results (in Canadian dollars)
Burcon reported a net loss of $2.0 million or $0.02 per basic and diluted share for the current quarter, as compared to $16.3 million or $0.15 per basic and diluted share in the same period last year. The decrease is due almost entirely to impairment losses recorded in the prior period for our investment in and loan to Merit and our share of loss in Merit.
Gross research and development expenses were $1.0 million, as compared to $1.2 million in the same year-ago quarter. The decrease of $200,000 is due mostly to a reduction in intellectual property expenses as a result of Burcon's patent portfolio optimization efforts, as well as lower stock-based compensation expense.
General and administrative expenses decreased by $65,000 during the third quarter over the same year-ago quarter. Our cash conservation efforts have led to reductions in investor relations expenses and costs related to the former U.S. listing. Professional fees increased due to consulting fees incurred for our strategic plan that have contributed to uncovering additional value and identifying opportunities for our technologies.
On December 31, 2023, cash balances totaled $675,000 compared to $1.5 million on March 31, 2023. During the current quarter, Burcon met the conditions for tranche two of the Large Scale loan facility. Subsequent to December 31, 2023, Burcon drew down $1.0 million from the loan. Burcon expects its cash resources to fund its operations to April 2024, and further to January 2025, if the Large Scale loan is fully drawn. These dates may be further extended if the Company receives funding or generates revenues from other sources including, but not limited to, hemp protein sales, government assistance, pilot plant processing and scale-up validation services.
Conference Call Details
Burcon will hold an investor conference call and webcast on Wednesday, February 14, 2024 at 5:00pm ET.
A link to the webcast of the conference call will be available on Burcon's website under "Presentations" or directly here. The webcast will also be archived for future playback.
Investors interested in participating in the live call can dial in using the details below:
Date: Wednesday, February 14, 2024
Time: 5:00 p.m. Eastern time (2:00 p.m. Pacific time)
Toll-free dial-in (North America): 1-855-327-6837
Dial-in (toll/international): 1-631-891-4304
Conference ID: 10022936
About Burcon NutraScience Corporation
Burcon is a global technology leader in the development of plant-based proteins for foods and beverages. Our proteins exhibit superior functionality, taste and nutrition, making them ideal ingredients for food formulators. With over two decades of experience, Burcon has amassed an extensive patent portfolio covering its specialty plant-based proteins derived from pea, canola, soy, hemp and sunflower seeds, among other plant sources. Burcon is striving to become a vertically integrated provider of specialty plant-based protein solutions that delivers on health, nutrition and sustainability. Supporting the growing trend towards a plant-based diet, Burcon is developing premium protein ingredients that we believe are better for you and better for the planet. For more information, visit burcon.ca.
Forward-Looking Information Cautionary Statement
The TSX has not reviewed and does not accept responsibility for the adequacy of the content of the information contained herein. This press release contains forward-looking statements or forward-looking information within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation. Forward-looking statements or forward-looking information involve risks, uncertainties and other factors that could cause actual results, performances, prospects and opportunities to differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements or forward-looking information can be identified by words such as "anticipate," "aim", "intend," "plan," "goal," "project," "estimate," "expect," "believe," "future," "likely," "may," "should," "could," "will" and similar references to future periods. All statements included in this release, other than statements of historical fact, are forward-looking statements. There can be no assurance that such statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements or information. Important factors that could cause actual results to differ materially from Burcon's plans and expectations include the implementation of our business model and growth strategies; trends and competition in our industry our future business development, financial condition and results of operations and our ability to obtain financing cost-effectively; potential changes of government regulations; and other risks and factors detailed herein and from time to time in the filings made by Burcon with securities regulators and stock exchanges, including in the section entitled "Risk Factors" in Burcon's annual information form for the year ended March 31, 2023 and its other public filings with Canadian securities regulators on SEDAR+ at www.sedarplus.ca. This list is not exhaustive of the factors that may affect any of the Company's forward-looking statements or information. Any forward-looking statement or information speaks only as of the date on which it was made, and, except as may be required by applicable securities laws, Burcon disclaims any intent or obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise. Although Burcon believes the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future performance, and, accordingly, investors should not rely on such statements.
Industry and Investor Contact
Paul Lam
Director, Investor Relations and Communications
Burcon NutraScience Corporation
Tel (604) 733-0896, Toll-free (888) 408-7960
plam@burcon.ca www.burcon.ca
Media Contact:
Steve Campbell, APR
President
Campbell & Company Public Relations
Tel (604) 888-5267
TECH@CCOM-PR.COM
| Burcon NutraScience Corporation | ||
| Condensed Consolidated Interim Statements of Financial Position | ||
| (Unaudited) | ||
| As at December 31, 2023 and March 31, 2023 | ||
| (In Canadian dollars) | ||
| December 31, | March 31, | |
| 2023 | 2023 | |
| Assets | ||
| Current assets | ||
| Cash | 675,378 | 1,456,845 |
| Amounts receivable | 130,715 | 332,118 |
| Prepaid expenses | 281,191 | 75,902 |
| 1,087,284 | 1,864,865 | |
| Property and equipment | 918,445 | 983,924 |
| Deferred development costs | 5,479,525 | 5,795,650 |
| Goodwill | 1,254,930 | 1,254,930 |
| 8,740,184 | 9,899,369 | |
| Liabilities | ||
| Current liabilities | ||
| Accounts payable and accrued liabilities | 629,620 | 590,936 |
| Lease liabilities | 36,924 | 34,431 |
| 666,544 | 625,367 | |
| Secured loan | 5,286,409 | 5,112,381 |
| Lease liabilities | - | 24,310 |
| 5,952,953 | 5,762,058 | |
| Shareholders' Equity | ||
| Capital stock | 117,752,639 | 114,566,577 |
| Contributed surplus | 17,283,934 | 16,763,830 |
| Options | 7,315,141 | 7,279,559 |
| Warrants | 228,572 | - |
| Restricted share units | 184,144 | 127,651 |
| Deficit | (139,977,199) | (134,600,306) |
| 2,787,231 | 4,137,311 | |
| 8,740,184 | 9,899,369 |
| Burcon NutraScience Corporation | |||||||||||||
| Condensed Consolidated Interim Statements of Operations and Comprehensive Loss | |||||||||||||
| (Unaudited) | |||||||||||||
| For the three and nine months ended December 31, 2023 and 2022 | |||||||||||||
| (In Canadian dollars) | |||||||||||||
| Three months ended | Nine months ended | ||||||||||||
| December 31 | December 31 | ||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||
| Revenue | |||||||||||||
| Royalty income | - | 161,206 | 184,359 | 363,913 | |||||||||
| Expenses | |||||||||||||
| Research and development | 1,020,424 | 1,002,231 | 2,870,287 | 3,326,507 | |||||||||
| General and administrative | 877,140 | 941,690 | 2,512,785 | 2,840,338 | |||||||||
| 1,897,564 | 1,943,921 | 5,383,072 | 6,166,845 | ||||||||||
| Loss from operations | (1,897,564 | ) | (1,782,715 | ) | (5,198,713 | ) | (5,802,932 | ) | |||||
| Interest and other income | 13,815 | 150,603 | 261,487 | 416,131 | |||||||||
| Interest and other expense | (134,011 | ) | (252,081 | ) | (414,843 | ) | (304,412 | ) | |||||
| Foreign exchange (loss) gain | (13,432 | ) | (2,461 | ) | (24,824 | ) | 3,588 | ||||||
| Share of loss in Merit Functional Foods Corporation | - | (2,095,659 | ) | - | (5,499,906 | ) | |||||||
| Impairment on investment in Merit Functional Foods Corporation | - | (7,987,303 | ) | - | (7,987,303 | ) | |||||||
| Impairment on loan to Merit Functional Foods Corporation | - | (4,333,630 | ) | - | (4,358,630 | ) | |||||||
| Loss and comprehensive loss for the period | (2,031,192 | ) | (16,303,246 | ) | (5,376,893 | ) | (23,533,464 | ) | |||||
| Basic and diluted loss per share | (0.02 | ) | (0.15 | ) | (0.04 | ) | (0.22 | ) | |||||
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/197954
SOURCE: Burcon NutraScience Corporation
