Burcon Announces Fiscal 2019 Results and Reviews Operations

Vancouver, British Columbia--(Newsfile Corp. - July 2, 2019) - Burcon NutraScience Corporation (TSX: BU), a global leader in developing functionally and nutritionally valuable plant-proteins, reported results for the year ended March 31, 2019.

"Fiscal 2019 proved to be a turning point in consumer appetites for plant-based foods and a watershed moment in Burcon's history," said Johann F. Tergesen, Burcon's president and chief executive officer. He added: "Looking back on the year, our team did a great job of focusing on and achieving our number one priority, and as a result we are now driving forward and building a first of its kind commercial-scale plant-protein production facility, where we will produce our unique pea and canola proteins directly through our just-announced partnership. As the world awakens to the opportunity of a better way to feed the planet, Burcon, with twenty years of expertise in plant-protein research, is ideally positioned to capitalize from the moment. We look forward to offering our pea and canola protein products to customers and consumers who choose to defy convention, embrace innovation, and who simply want to feel great about their health and sustainability."

Fiscal 2019 Operational Highlights

  • Pursued ongoing discussions, negotiations and participated in due diligence visits associated with partnering activities;
  • Burcon's Winnipeg Technical Centre undertook Peazazz® applications work and provided significant quantities of samples throughout the year in response to requests from and in support of analytical work conducted by potential commercialization partners as well as for food and beverage companies who have expressed an interest in Peazazz® and Peazac®; and
  • Received two U.S. patent grants during the fiscal year, including one for the production of Peazazz® and one for soy. The Peazazz® patent granted by the U.S. Patent and Trademark Office relates to a process for producing pea protein isolates with reduced astringency in low pH solutions. The company's patent portfolio now comprises 262 issued patents in various countries, including 67 in the U.S., as well as more than 265 active patent applications, including 42 additional U.S. patent applications.

Subsequent to the year-end, the Company announced / completed the following significant developments:

  • Burcon's new novel and proprietary Nutratein-PS™, and Nutratein-TZ™ pea protein and canola protein blends. These new plant-protein blends have exceptional functional characteristics, low allergenicity, and a nutritional value exceeding those of the standard pea proteins available on the market today;
  • The establishment of a joint venture partnership with three veterans of the agri-foods industry to form Merit Functional Foods Corporation ("Merit Foods") to build and operate a $65 million plant protein production facility;
  • Completed the initial capital contribution of $4.0 million to Merit Foods;
  • Entered into a 20-year exclusive, royalty-bearing license agreement with Merit Foods for Burcon's pea and canola protein technologies; and
  • Completed a $15.4 million rights offering that was 37% over-subscribed (60,572,585 total shares subscribed-for).

Management Commentary

Over the past year we saw a substantial increase in the interest in and awareness of plant-based foods, both here in North America and globally. This was perhaps demonstrated most notably by the media coverage of the initial public offering of Beyond Meat, a U.S.-based meat analogue company. In an equally dramatic scale, Burcon also experienced a surge in interest over the past year in our plant-based protein ingredients. In Burcon's case, that came in the form of inbound interest from food and beverage companies wanting our plant-based protein ingredients for use in their products and it also came in the form of spirited discussions and negotiations with potential partners, which negotiations eventually culminated - subsequent to our fiscal year end - with Burcon entering into a joint venture to build a $65 million pea-protein and canola-protein production facility in Western Canada.

During fiscal 2019, Burcon made important advancements toward commercializing its unique plant proteins and its plant protein extraction technologies. Most importantly, Burcon worked closely with a few qualified potential partners to explore opportunities to establish a first commercial production facility for Burcon's pea and canola protein extraction technologies. The partnering activities during the year included market analyses, product applications work, and a detailed investigation of the logistics and economics associated with building, commissioning and operating a commercial protein production facility. Burcon's team at the Winnipeg Technical Centre supported these ongoing discussions with: due diligence visits; applications work on potential consumer products; and sample production, both for the potential partners as well as for food and beverage companies who have expressed an interest in Peazazz® and Peazac® and in Burcon's canola proteins.

Subsequent to the year-end, Burcon announced the establishment of a joint venture partnership with three veterans of the agri-foods industry to form Merit Foods, which will build and operate a $65 million plant protein production facility. As part of establishing Merit Foods, Burcon also announced a 20-year exclusive, royalty-bearing license agreement with Merit Foods for Burcon's pea and canola protein technologies. Lastly, Burcon completed a $15.4 million rights offering that was 37% over-subscribed. With the funds from the rights offering, Burcon can complete its $8 million investment in the Merit Functional Foods joint venture, repay its outstanding indebtedness and fund its ongoing research and development.

In the coming year, Burcon's team will maintain a laser beam focus on assisting Merit Foods with all aspects of the process to construct and then commission the commercial production facility. Burcon will also continue to conduct research on other plant-based proteins opportunities and to undertake patenting activities.

Financial Results (in Canadian dollars)

Revenues totaled $40,000 for the year, as compared to $49,000 in the same year-ago period. The nominal revenues reflect the company's development phase status as it transitions to the commercial stage.

Net loss totaled $4.8 million or $0.11 per basic and diluted share for fiscal 2019, as compared to a net loss of $5.6 million or $0.15 per basic and diluted share in fiscal 2018.

Research and development expenses totaled $1.7 million for the year, as compared to $1.9 million in fiscal 2018. About one-half of the decrease of $0.2 million is attributed to lower stock-based compensation expense recorded for this year, with the balance of the decrease due to lower laboratory operation expenses.

Intellectual property expenses went down by $0.5 million, from $1.7 million in fiscal 2018 to $1.2 million in fiscal 2019. The Company has been deferring maintenance fees and limiting prosecution activities, where possible, in an effort to conserve cash resources. This has resulted in lower maintenance fees during fiscal 2019. In addition, we incurred higher European registration fees last year from three patent applications that were granted in Europe.

General and administrative expenses decreased to $1.7 million in fiscal 2019 from $2.0 million in fiscal 2018. About one-half of the decrease is attributed to lower investor relations expenses, due mostly to the Nasdaq annual fees and U.S. consulting fees incurred in fiscal 2018.

At March 31, 2019, cash balances totaled $0.5 million compared to $3.4 million at March 31, 2018. On June 25, 2019, Burcon completed a rights offering that provided gross proceeds of $15.4 million, with net proceeds of $15.3 million. The Company has repaid its convertible loan and short-term loan obligations totaling $4.2 million and made its first capital contribution of $4.0 million to Merit Foods from the net proceeds of the rights offering. As previously announced, Burcon expects to make its second capital contribution of $4.0 million to Merit Foods on or before September 3, 2019. After the second capital contribution to Merit Foods, management believes it has sufficient resources to fund its expected level of operations and working capital requirements to June 2020. This estimate does not take into account potential proceeds from outstanding convertible securities or royalty revenues from the sale of CLARISOY®.

The company's complete financial statements, along with management's more detailed discussion and analysis, are available from the company's Investors section at www.burcon.ca or from www.sedar.com.

About Burcon NutraScience Corporation

Burcon is a leader in developing functionally and nutritionally valuable plant proteins. The company has developed an extensive portfolio of composition, application, and process patents originating from a core protein extraction and purification technology. Burcon's family of plant proteins includes Peazazz®, a uniquely soluble and clean-tasting pea protein, Puratein®, Supertein® and Nutratein® canola proteins with exceptional functionality and valuable nutritional profiles, and Nutratein-PS and Nutratein-TZ, Burcon's new pea and canola protein blends that have exceptional functional characteristics, low allergenicity, and a nutritional value exceeding those of standard pea proteins in the market today. Burcon's CLARISOY® soy protein - under license to the Archer Daniels Midland Company - offers clarity and high-quality protein nutrition for low-pH beverage systems, and excellent solubility and exceptionally clean flavour at any pH. For more information about the company, visit www.burcon.ca.

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," "intend," "plan," "goal," "project," "estimate," "expect," "believe", "future," "likely," "may," "should," "could", "will" and similar references to future periods. All statements other than statements of historical fact included in this release are forward-looking statements, including, without limitation, statements regarding expectations, intentions and plans contained in this press release. 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 actual results of business negotiations, marketing activities, adverse general economic, market or business conditions, regulatory changes 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 dated June 28, 2019 filed with the Canadian securities administrators on www.sedar.com. Any forward-looking statement or information only speaks 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 that 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.

CLARISOY is a trademark of Archer Daniels Midland Company.

Investor Contact:

Paul Lam
Manager, Business Development
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
Consolidated Balance Sheets
As at March 31, 2019 and 2018

     
 (Prepared in Canadian dollars)    


2019
2018


$

$
ASSETS








Current assets



    Cash and cash equivalents
489,215
3,420,865
    Amounts receivable
126,605
154,289
    Prepaid expenses
307,997
230,605


923,817
3,805,759
 




Property and equipment
284,689
378,294
Goodwill
1,254,930
1,254,930
 






2,463,436
5,438,983
 




LIABILITIES



Current liabilities



    Accounts payable and accrued liabilities
633,209
804,001
    Short-term loan
1,250,000
-
    Derivative liability
5,384
59,288
    Convertible note
1,990,686
-
    Accrued interest
564,251
-


4,443,530
863,289
 




Convertible note
-
1,905,807
Accrued interest
-
324,871
 






4,443,530
3,093,967
 




SHAREHOLDERS' EQUITY



Capital stock
73,361,133
73,361,133
Contributed surplus
9,001,467
7,599,389
Options
9,184,852
10,329,057
Warrants
199,117
4,723
Deficit
(93,726,663)
(88,949,286)
 






(1,980,094)
2,345,016
 






2,463,436
5,438,983

 

BURCON NUTRASCIENCE CORPORATION
Consolidated Statements of Operations and Comprehensive Loss
For the years ended March 31, 2019 and 2018

     
 (Prepared in Canadian dollars)    


2019
2018


$

$
REVENUE



Royalty income
40,177
49,014
 




EXPENSES



Research and development
1,692,519
1,936,325
Intellectual property
1,217,949
1,739,254
General and administrative
1,681,882
1,962,963
 






4,592,350
5,638,542
 




LOSS FROM OPERATIONS
(4,552,173)
(5,589,528)
 




INTEREST AND OTHER INCOME
92,073
172,774
 




INTEREST EXPENSE
(324,259)
(265,509)
 




FOREIGN EXCHANGE GAIN (LOSS)
6,982
(30,030)
 




CHANGE IN FAIR VALUE OF DERIVATIVE LIABILITY
-
89,508
 




LOSS AND COMPREHENSIVE LOSS FOR THE YEAR
(4,777,377)
(5,622,785)
 




BASIC AND DILUTED LOSS PER SHARE
(0.11)
(0.15)
 




 

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/46032

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