Burcon Reports Fiscal 2024 Second Quarter Results

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Vancouver, British Columbia--(Newsfile Corp. - November 14, 2023) - 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 second quarter ended September 30, 2023.

Operational highlights for the second quarter ended September 30, 2023:

During the quarter, Burcon:

  • partnered with HPS Food and Ingredients to launch the world's first high purity hempseed protein isolate;
  • successfully launched its 95% hempseed protein isolate at IFT FIRST 2023 in Chicago, IL;
  • unlocked additional value for its new-to-the-world hemp and sunflower protein technologies;
  • showcased its 95% hempseed protein isolate at Natural Products Expo East trade show;
  • advanced market development initiatives for its hempseed protein through sample production and technical due diligence with prospective customers;
  • expanded its scope of strategic partnership opportunities for each of its innovative plant-based protein technologies;
  • extended the first tranche maturity date of its loan agreement with its largest shareholder to July 1, 2025; and
  • received $184,000 in royalty revenue from Merit's receiver for the sale of pea and canola proteins

Subsequent to the quarter-end, Burcon:

  • continued to receive significant customer interest from hempseed protein launch; and
  • continued to engage the market with its 95% hempseed protein at SupplySide West tradeshow

Management Commentary

Burcon's fiscal 2024 second quarter was off to a tremendous start with the announcement of a hemp partnership as the first of many proof points for Burcon 2.0. We believe our partnership with HPS Food and Ingredients Inc. ("HPS") perfectly aligns with our three strategic imperatives of Burcon 2.0, which are to identify additional revenue sources, get closer to customers and gain more influence over the production of our proteins. Through a capital-light partnership approach, Burcon expects that it can rapidly develop the market, begin commercial production and achieve sales in 2024, bringing the world's first high purity 95% hempseed protein isolate to market.

According to Research and Markets, the global hemp-based food market is projected to double in the next five years, growing at a rate of over 15%. Based on market data and internal estimates, there is potentially a multi-billion dollar addressable market for our hempseed protein with over $100 million potential for Burcon. Since our successful launch of our 95% hempseed protein at IFT FIRST, Burcon and HPS have prioritized customer engagement to develop the market for this novel protein. A large number of samples for evaluation and testing have been sent out, with prospective customers moving forward on product development and pilot testing trials. Subsequent to quarter-end, we announced that Burcon has received significant customer interest for its 95% hempseed protein. The market reception has far exceeded our expectations and as a result, Burcon and HPS are accelerating their plans to commercialize hempseed protein. We expect to complete the process validation trials and begin commercial production in early 2024 to meet the overwhelming customer demand.

During the quarter, we unlocked value in our new-to-the-world sunflower proteins and hemp protein isolate. We uncovered additional value, particularly in our sunflower process, which we believe could drastically improve the economics of the offering. Where traditional ingredient processing yields a lead product and by-products or waste streams, Burcon's sunflower process yields two valuable protein ingredients each with its own unique functionality and target applications. We are very encouraged with our sunflower technology and are in the process of exploring additional routes to market.

Burcon continues to pursue non-dilutive government funding sources that could help offset our R&D and commercialization expenses. Our funding application to Protein Industries Canada is currently in the final stages and if successful, we could receive a co-investment on a $7 million project to commercialize hemp and sunflower. Additional non-dilutive funding, which is available to Burcon if we meet certain conditions, includes Burcon's previously announced second $5 million tranche of the total $10 million loan from our largest shareholder. In aggregate, these funding sources could extend Burcon's cash runway into 2025.

Our team set out to execute our Burcon 2.0 strategy and we delivered our first of many proof points with a direct line of sight to revenue in 2024. The market outlook for our hempseed protein is promising while we seek to commercialize Burcon's full suite of high purity, next generation protein ingredients. We anticipate that 2024 can be a transformative year for Burcon and look forward to creating additional value for Burcon and its shareholders.

Financial Results (in Canadian dollars)

During the current quarter, Burcon recorded $184,000 in royalty from the sale of Merit's protein products from the receivership process. During the same year-ago quarter, Burcon recorded $112,000 in royalty from Merit's sale of protein products.

Net loss totaled $1.4 million or $0.01 per basic and diluted share for the current quarter, as compared to $3.2 million or $0.03 per basic and diluted share in same period last year. The lower loss this year, as compared to last year's, is due mainly to the share of loss in Merit recorded during the second quarter of fiscal 2023 and to lower operating expenses.

Research and development totalled $909,000, as compared to $1,076,000 in the same year-ago quarter. The decrease of $167,000 is due to lower intellectual property expenses, as well as to lower stock-based compensation expense.

General and administrative expenses totalled $803,000, as compared to $987,000 in the same year-ago quarter. The decrease of $184,000 is a result of cash conservation measures we have undertaken, which have resulted in reductions in investor relations expenses, as well as expenses that related to the U.S. listing.

Overall, cash operating expenditures have decreased 16% this quarter over the same period last year, with G&A and IP expenses down by 24% this quarter over the same year-ago quarter. The Company continues to implement cost-cutting measures, where appropriate.

At September 30, 2023, cash balances totaled $2.2 million compared to $1.5 million at March 31, 2023. During the current quarter, Burcon and Large Scale entered into an agreement to extend the maturity date of the first tranche of the secured loan from July 1, 2024 to July 1, 2025. Burcon expects its cash resources to fund its operations to February 2024, and further to February 2025, if conditions for advance under the second tranche are satisfied. These dates may potentially be extended if the Company receives funding or generates revenues from other sources including, not limited to, government assistance, pilot plant processing and scale-up validation services.

Conference Call Details

Burcon will hold an investor conference call and webcast on Tuesday, November 14, 2023 at 5:00pm ET.

A link to the webcast of the conference call is 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: Tuesday November 14, 2023

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: 10022578

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
[email protected] www.burcon.ca

Media Contact:
Steve Campbell, APR
President
Campbell & Company Public Relations
Tel (604) 888-5267
[email protected]

 Burcon NutraScience Corporation 
 

 
 Condensed Consolidated Interim Statements of Financial Position 

 
 (Unaudited) 
 

 
 As at September 30, 2023 and March 31, 2023 
 

  
 (In Canadian dollars) 
 

 
  September 30,


March 31,
 
 
2023

2023 
 
 

 
 Assets 
 

 
 Current assets 
 

 
 Cash  
2,227,690

1,456,845
 Amounts receivable 
174,894

332,118
 Prepaid expenses    203,436

75,902 
 
2,606,020

1,864,865
 
 

 
 Property and equipment 
911,617

983,924
 Deferred development costs  
5,584,899

5,795,650
 Goodwill   1,254,930

1,254,930 
 
 

 
   10,357,466

9,899,369 
 
 

 
 Liabilities 
 

 
 Current liabilities 
 

 
 Accounts payable and accrued liabilities 
584,883

590,936
 Lease liabilities   46,146

34,431 
 
631,029

625,367
 
 

 
 Secured loan 
5,166,682

5,112,381
 Lease liabilities   -

24,310 
 
 

 
   5,797,711

5,762,058 
 
 

 
 Shareholders' Equity 
 

 
 Capital stock 
117,725,612

114,566,577
 Contributed surplus 
16,871,671

16,763,830
 Options 
7,498,730

7,279,559
 Warrants 
228,572

-
 Restricted share units 
181,178

127,651
 Deficit   (137,946,008)
(134,600,306)
 
 

 
   4,559,755

4,137,311 
 
 

 
   10,357,466

9,899,369 

 

 Burcon NutraScience Corporation
 

 

 

 
 Condensed Consolidated Interim Statements of Operations and Comprehensive Loss 

 
 (Unaudited) 
 

 

 

 
 For the three and six months ended September 30, 2023 and 2022
 

 

  
 (In Canadian dollars) 
 

 

 

 
 
Three months ended

Six months ended
 
 

September 30

 

September 30 
 
2023

2022

2023

2022
 
 

 

 

 
 Revenue 
 

 

 

 
 Royalty income 
184,359

112,169

184,359

202,707 
 
 

 

 

 
 Expenses 
 

 

 

 
 Research and development 
909,422

1,075,999

1,849,863

2,324,279
 General and administrative 
803,157

987,260

1,635,646

1,898,647 
 
1,712,579

2,063,259

3,485,509

4,222,926 
 
 

 

 

 
 Loss from operations 
(1,528,220)
(1,951,090)
(3,301,150)
(4,020,219)
 
 

 

 

 
 Interest and other income 
220,294

149,511

247,673

265,528
 
 

 

 

 
 Share of loss in Merit Functional Foods Corporation 
-

(1,400,506)
-

(3,404,247)
 
 

 

 

 
 Interest and other expense 
(149,859)
(36,569)
(280,833)
(77,330)
 
 

 

 

 
 Foreign exchange (loss) gain   
24,166

4,604

(11,392)
6,050 
 
 

 

 

 
 Loss and comprehensive loss for the period   
(1,433,619)
(3,234,050)
(3,345,702)
(7,230,218)
 
 

 

 

 
 Basic and diluted loss per share   (0.01)
(0.03)
(0.03)
(0.07)

 

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/187372

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