Vancouver, British Columbia, June 22, 2023 — Burcon NutraScience Corporation (“Burcon” or the “Company”) (TSX: BU), a global technology leader in the development of plant-based proteins for foods and beverages, reported unaudited results for the fiscal year ended March 31, 2023.
“Fiscal 2023 was a challenging year for Burcon. The company overcame setbacks, brought in new leadership and chartered a new course for the Company,” said Kip Underwood, Burcon’s chief executive officer. “We believe in the market opportunity driven by plant-based foods and the role our technology can play in its success. Our pea, canola and soy proteins are proven on a commercial scale, while our sunflower and hemp proteins are market ready. Burcon has a portfolio of proteins that offers compelling value propositions to food formulators addressing the needs of health and sustainability. We are excited to move forward with our Burcon 2.0 strategy and look forward to capitalizing on the opportunities ahead.”
Fiscal 2023 Operational Highlights
Burcon’s focus for fiscal 2023 was to bring in new leadership for its next chapter of growth and to pursue commercialization opportunities for its portfolio of best-in-class plant-based protein ingredients.
During fiscal 2023, Burcon:
Subsequent to the year-end, Burcon:
Management Commentary
Fiscal 2023 saw Burcon go through the ebbs and flows of a growing food technology company and ultimately, returning to its innovative roots to push forward on Burcon 2.0. Merit Functional Foods Corporation (“Merit”) was one of multiple paths to market for Burcon’s unique protein ingredients and there are additional routes to market that Burcon is pursuing. Our Burcon 2.0 strategic framework focuses on three themes: identifying new revenue streams, getting closer to customers and markets, and gaining more influence over the manufacture of our technology. Our approach going forward is based on this strategic framework where Burcon expects to capitalize on opportunities to bring to market our innovative protein ingredients.
During the year, Burcon completed a business assessment which included a review of the market, our technologies, products and their value propositions. We believe the market today for specialty plant-based protein ingredients has grown significantly and evolved from five years ago. Consumers continue to demand products that are better-for-themselves and better-for-the-planet. At the same time, major investments into the food ecosystem have created a landscape of food and agri-technology companies all striving towards the same goal – to revolutionize the food system. Both the market and competitive landscape today have evolved to the benefit of Burcon, presenting us with new opportunities to partner and collaborate with a growing number of industry players. With that backdrop, we continue to execute against our Burcon 2.0 strategy by proactively engaging and having ongoing discussions with potential partners and customers.
Burcon announced a breakthrough in the development of a process to extract high-purity protein from sunflower seeds, the world’s third largest oilseed crop. Our technical team of scientists and engineers developed a proprietary process to extract and purify a by-product from sunflower oil production into a highly pure and neutral tasting sunflower protein isolate. Subsequent to year-end, Burcon announced that it has successfully completed end-to-end validation trials of its novel sunflower protein process, a major milestone in the commercialization roadmap. Our discussions with potential partners to bring this unique technology to market are progressing well and we aim to launch our sunflower protein in the near future to tap into new markets and customers.
Burcon currently has a portfolio of protein technologies that offers compelling value propositions to the plant-based food market. Our pea, canola and soy proteins are commercially proven while our sunflower and hemp proteins are validated and market-ready. During the year, we bolstered our IP portfolio with an additional 29 patents, two of which are US patent grants covering a key Peazazz pea protein process and a sunflower protein process.
As for our balance sheet, we began fiscal 2024 with newly injected capital from our $3.4 million non-brokered private placement, which is expected to provide us with sufficient runway to execute our Burcon 2.0 strategy. We believe that a successful financing validates our shareholders’ belief in the Company’s vision and strategy. As a result of strong support from our long-term shareholders, we were able to raise well above our initial target under challenging market conditions. We are grateful for the continued support.
In the year ahead, as part of our Burcon 2.0 initiatives, we expect to work closely with our potential partners and customers, tailor our protein products and services to the needs of the market and execute on our growth plan to secure new sources of revenue. We are excited to move forward and see tremendous potential for our technologies in the marketplace.
Financial Results (in Canadian dollars)
| Summary of Financial Results (unaudited)
Years ended March 31 |
||
| (in millions, except per share amounts) | ||
|
2023 |
2022 |
|
| Royalty income |
0.4 |
0.2 |
| Operating expenses |
7.8 |
7.6 |
| Share of loss in Merit |
(5.5) |
(4.3) |
| Write-off of investment in and loans to Merit |
(12.4) |
– |
| Loss and comprehensive loss for the year | (25.3) | (10.3) |
| Basic and diluted loss per share | (0.23) | (0.09) |
The increase, in the year-over-year loss, is attributed almost entirely to the write-off of the investment in and loans to Merit and to the increase in the share of loss in Merit, both are unchanged from the amounts reported in the third quarter of fiscal 2023.
Total operating expenses for fiscal 2023 did not change significantly over fiscal 2022. Research and development (“R&D”) expenses, including intellectual property (“IP”) expenses, were $4.1 million for the year ended March 31, 2023, as compared to $3.3 million in the prior fiscal year. During fiscal 2023, Burcon recorded funding of approximately $453,000 from Protein Industries Canada (“PIC”) that has been applied to reduce R&D expenses.
Gross R&D expenses during fiscal 2023 decreased by $1.2 million over fiscal 2022, before PIC funding recorded in fiscal 2023 and also $2.2 million that was capitalized to deferred development costs in fiscal 2022. Of the decrease, IP expenses decreased by $1.0 million over fiscal 2022. During fiscal 2023, Burcon conducted a detailed review of its patent portfolio with the objective of focusing on technologies with the greatest potential value. To optimize the patent portfolio, Burcon abandoned certain non-core patent applications that were deemed to be non-essential or redundant for the purposes of achieving its strategic objectives, as well as deferring maintenance payments while a detailed review was undertaken. Other gross R&D expenditures decreased mainly from staff changes, as well as cost-saving measures that were implemented to conserve cash resources.
General and administrative expenses were $3.7 million for fiscal 2023, as compared to $4.3 million in the prior fiscal year. The decrease in fiscal 2023 is due mostly to lower professional fees, investor relations expenses related to the Nasdaq listing and to lower stock-based compensation expense.
Cash and Liquidity
As at March 31, 2023, the Company had approximately $1.5 million of cash. During fiscal 2023, Burcon secured a $10 million loan facility from its major shareholder, of which Burcon drew down a total of $5.0 million from the first tranche of the facility during fiscal 2023. Subsequent to the year-end, Burcon completed a non-brokered private placement for gross proceeds of $3.4 million. Burcon expects its cash resources to fund its operations to March 2024, and further to March 2025, if conditions for advance under the second tranche of $5 million are satisfied.
Financial Disclosure Advisory
The financial information presented herein is unaudited and has been prepared using International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. The financial information is based on reasonable estimates and information available to the Company at this time. As such, the Company’s actual results may vary from the financial information presented herein. In addition, the unaudited financial information presented herein does not present all information necessary for an understanding of the Company’s financial condition and results of operations as of and for the year ended March 31, 2023. The Company expects to file its Audited Consolidated Financial Statements and Management’s Discussion and Analysis for the years ended March 31, 2023 and 2022 with securities regulators in Canada by June 29, 2023. These documents will be made available in the Investors Relations section of www.burcon.ca and www.sedar.com.
Conference Call Details
Burcon will hold an investor conference call and webcast on Thursday, June 22, 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: Thursday June 22, 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: 10021972
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 novel 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 deliver 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 www.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, including whether we will succeed in discussions with potential partners and customers, whether our sunflower protein extraction and purification technology will be economical and scalable and whether we will be able to execute our Burcon 2.0 strategies to secure new sources of revenue. 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, 2022 and its other public filings with Canadian securities regulators on SEDAR at www.sedar.com. 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
Burcon NutraScience Corporation
Tel (604) 733-0896, Toll-free (888) 408-7960
Media Contact:
Steve Campbell, APR
President
Campbell & Company Public Relations
Tel (604) 888-5267