Burcon NutraScience: Q4 & Full Year Results
Vancouver, British Columbia — Burcon NutraScience Corporation (TSX: BU, NASDAQ: BUR), a leader in functional and renewable plant proteins, reported results for the fiscal fourth quarter and year ended March 31, 2015.
Fiscal 2015 operational highlights:
Completed an oversubscribed rights offering in April, 2014, for $5.25-million, with net proceeds of $5.0-million;
Received a patent grant from the U.S. Patent and Trademark Office for Clarisoy's first composition of matter patent. This composition of matter patent provides protection over the commercially valuable attributes of Clarisoy, which include, amongst others, its unique solubility and transparency in solution, and absence of taste or smell;
Advanced discussions with a select group of multinational food ingredient providers for a royalty or a joint operations agreement of Peazazz;
Burcon's Winnipeg technical centre undertook Peazazz applications work and sample production throughout the year in response to requests from, and in support of, analytical work conducted by these potential commercialization partners;
Burcon's exclusive manufacturing and marketing partner for Clarisoy, Archer Daniels Midland Company (ADM), facilitated Clarisoy development activities in the global food and beverage market while operating the world's first Clarisoy semiworks plant to produce samples of the Clarisoy soy protein line for market development purposes;
ADM completed its acquisition of Wild Flavors GmbH and formed a new business unit, Wild Flavors and Specialty Ingredients, which includes the Wild business as well as ADM's specialty proteins product line, among others;
Burcon completed a private placement with a respected group of United States-based investors for $1.65-million (U.S.);
Received five U.S. patent grants and an additional two U.S. patent grants subsequent to the end of the fiscal year, bringing the company's patent portfolio to 188 issued patents in various countries, including 59 in the U.S., as well as more than 375 active patent applications, including 59 additional U.S. patent applications;
Subsequent to the year-end, Burcon completed an oversubscribed rights offering for gross proceeds of $3.5-million, with net proceeds of $3.35-million.
"Over the course of the past year, Burcon witnessed significant advancements for the Clarisoy soy protein line, its lead product, by its licence partner Archer Daniels Midland. In late 2014 ADM closed its largest acquisition in its corporate history, acquiring Wild Flavors for $3.1-billion (U.S.), and merging those assets with ADM's own specialty ingredients foods and wellness division to create the new Wild Flavors & Specialty Ingredients business unit. Clarisoy is now being produced, marketed and sold within this new business unit, a business unit ADM has publicly stated will be a driver of future growth.
"Since the signing of the Clarisoy licence and production agreement with ADM in March, 2011, Burcon has filed a number of additional U.S. patent applications for inventions covering Clarisoy soy protein's composition, Clarisoy applications, and Clarisoy extraction and purification processes.
"During the past year, ADM elected to add another one of the new Clarisoy patent applications to the Clarisoy licensee and production agreement. Burcon filed these patent applications as we expect they will provide important commercial protection for the production and use of Clarisoy. More importantly, we believe adding these patent applications could also result in considerable lengthening of the royalty term under the Clarisoy licence and production agreement.
"During the past year, Burcon realized similarly important developments with its second major technology, its Peazazz pea protein. Burcon has been operating its semiworks production facility, which utilizes commercial-scale equipment, and is capable of producing the tonnage amounts of Peazazz required by food and beverage makers looking to conduct full-scale, real-world market evaluations of Peazazz in their consumer products, to continue the development of the Peazazz commercial opportunity.
"Burcon advanced its discussions with multiple potential partners over the past year. These partners have conducted product testing, applications development, pricing analyses and real-life consumer trials to test the market potential for Peazazz sales. Peazazz exhibits unique potential in key applications and is expected to garner significant sales opportunities. We remain confident of the ability to enter into a commercialization partnership for our Peazazz pea protein technology and to commercialize the opportunity in partnership with an established food ingredients industry player.
"We see continued acceleration of the demand for protein ingredients globally and specifically for plant protein. Burcon believes it is extremely well positioned, both through the royalty arrangement with ADM on Clarisoy and the discussions with potential partners for Peazazz, to derive benefits from the global trend for protein, and health and wellness in general."
Fiscal fourth quarter and full-year financial results (in Canadian dollars)
Revenues totalled $26,000 in the fiscal fourth quarter, which is slightly lower than the prior quarter and consistent with the same year-ago period, and were derived mainly from deferred royalty payments from ADM for Clarisoy sales. The nominal revenues reflect the company's development phase status as it transitions to the commercial stage. Revenues for the fiscal year totalled $105,000 compared with $95,000 in fiscal 2014, which were also derived mainly from deferred royalty payments from ADM. Royalty revenues from the sale by ADM of Clarisoy as produced from its semiworks facility in Decatur, Ill., have been marginal. The main purpose of the semiworks plant has been to provide commercial samples for market development purposes and to facilitate other product development work.
Fourth-quarter net loss totalled $1.5-million or five cents per basic and diluted share, as compared with a net loss of $1.2-million or four cents per basic and diluted share in the same year-ago quarter. For the full fiscal year, net loss totalled $6.6-million or 20 cents per basic and diluted share, as compared with a net loss of $6.0-million or 19 cents per basic and diluted share in fiscal 2014.
Research and development (R&D) expenses totalled $665,000 in the fourth quarter, increasing from $599,000 in the same year-ago quarter. The increase is due mainly to higher stock-based compensation expense and technical staff being on leave in the year-ago quarter. For the fiscal year, R&D expenses totalled $2.5-million, relatively unchanged from the same year-ago quarter.
General and administrative (G&A) expenses in the fourth fiscal quarter increased to $1,146,000 from $788,000 in the year-ago quarter, and increased to $4.5-million in fiscal 2015 from $4.0-million in the fiscal 2014. The bulk of the increase in G&A expenses for the quarter is due mainly to an increase in patent legal fees, with significant fees incurred for patent applications that entered national phase and to patent applications that were granted in Europe that incurred registration fees in various European countries. The increase of G&A expenses over the fiscal 2014 is mainly attributed to the recognition of warrants issued to guarantors of the April, 2014, rights offering of $358,000, with the balance to higher patent legal fees.
At March 31, 2015, cash and short-term investments totalled $3.7-million compared with $1.4-million at March 31, 2014. In April, 2015, Burcon completed a rights offering that provided net cash proceeds of $3.35-million. Management believes it has sufficient resources to finance its expected level of operations and working capital requirements until at least July, 2016. This estimate does not take into account potential proceeds from outstanding convertible securities, royalty revenues from the sale of Clarisoy, or any other potential revenue from product sales or licensing.
The company’s complete financial statements, along with management’s more detailed discussion and analysis, are available from the company’sInvestors section at www.burcon.ca or from www.sedar.com.
About Burcon NutraScience Corporation
Burcon NutraScience is a leader in developing functionally and nutritionally valuable plant-based proteins. The company has developed a portfolio of composition, application, and process patents originating from a core protein extraction and purification technology. Burcon’s CLARISOY™ soy protein offers clarity and high-quality protein nutrition for low pH beverage systems and excellent solubility and exceptionally clean flavor at any pH; Peazazz® is a uniquely soluble and clean-tasting pea protein; and Puratein®, Supertein® and Nutratein® are canola protein isolates with unique functional and nutritional attributes. For more information about the company, visit www.burcon.ca.