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DGAP-News: Burcon NutraScience Corp. / Key word(s): Quarter Results
Burcon Reports Fiscal 2022 Second Quarter Results
Vancouver, British Columbia, November 15, 2021 - Burcon NutraScience Corporation ("Burcon or the "Company") (TSX: BU) (NASDAQ: BRCN), 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, 2021.
Operational highlights for the second quarter ended September 30, 2021:
During the quarter, Burcon:
During the quarter, Merit Foods:
"Merit's protein sales increased by 76% during the quarter as compared to the previous quarter, when Merit first began fulfilling commercial sales orders for its best-in-class pea and canola protein ingredients. Merit has been working with and supporting numerous CPG companies targeting solutions that incorporate Merit's novel pea and canola protein ingredients into new or reformulated food and beverage products. Merit's pea and canola proteins offer unparalleled taste, texture and purity, and we are encouraged by the growing interest from CPG companies for Merit's proteins."
"During the quarter, we continued to progress discussions with a number of interested parties for additional partnership opportunities. Those discussions include potential new joint ventures and production facilities. We have also continued to work with a third-party engineering firm to assist us in planning and designing a new and expanded technology and innovation center. We are in the process of identifying and shortlisting possible suitable locations for Burcon's new innovation centre. Not only will the new innovation centre provide the commercial production capability to serve as a very small-scale commercial production plant, but would also provide Burcon with additional R&D bandwidth to pursue additional research opportunities in the future."
"We've added three patents in various countries covering our novel extraction processes for producing high-quality protein ingredients from soy and non-soy oilseed starting materials. Burcon continues to bolster its intellectual property portfolio which now consists of a total of 299 granted patents worldwide."
"We were pleased to announce the appointment of Peter H. Kappel as chairman of Burcon's board of directors. Mr. Kappel was appointed as a director of Burcon in January 2016 and has been instrumental in Burcon's latest developments. We were also pleased to announce that Jeanne McCaherty and Alfred Lau have joined our board of directors. Ms. McCaherty brings a wealth of knowledge of the global food ingredients industry to the Burcon board and has immediately added value to Burcon's board and management team. Mr. Lau brings extensive financial and business experience to Burcon's board. We look forward to the support from Ms. McCaherty, Mr. Lau and the rest of the board as Burcon transitions to a revenue-generating company and secures additional strategic partnerships for its innovative protein technologies that can sustainably play a role in the growing plant-based food revolution."
Financial Results (in Canadian dollars)
Royalty revenues from Merit totaled $32,000 in the second quarter, as compared to $18,000 in the previous quarter. The nominal royalty amounts reflect Merit's commissioning process during the period towards full production capacity.
Second quarter loss totaled $1.4 million or $0.01 per basic and diluted share. This compares to income of $4.4 million or $0.04 per basic and diluted share in the same year-ago quarter. Following the investment by Bunge Limited into Merit during the second quarter of fiscal 2021, Burcon recorded a dilution gain of $6.4 million.
Merit continued to fulfil commercial sales orders of pea and canola protein products during this quarter, and Burcon recorded its royalty revenue of $32,000 from Merit, with an increase of 76% over the first quarter. Merit recorded sales revenues of $1.6 million during the quarter, representing sales of pea and canola protein products, as well as sales of commodity items and by-products.
Burcon recorded $159,000 as its share of loss in Merit Foods for the second quarter of fiscal 2022, as compared to $949,000 in the same year-ago quarter. Included in the share of Merit Foods' loss is a recovery of $656,000 to correct a deferred income tax adjustment related to the first quarter of fiscal 2022. After taking into account this adjustment, Burcon's share of Merit Foods' loss is not significantly different from that in the same year-ago quarter. Merit Foods' loss reflects its stage of development as it continued to commission and optimize the flex production facility.
Gross research and development expenses totaled $723,000 for the three months ended September 30, 2021, as compared to $614,000 in the same year-ago quarter. The increase in R&D expenses is due mainly to higher stock-based compensation expense, salary increases and staff additions. The Company began deferring canola and pea development expenses from the second quarter of fiscal 2020. During the current quarter, Burcon allocated $484,000 of R&D costs to deferred development costs.
Gross intellectual property expenses decreased by $161,000 for the second quarter of 2022, as compared to the same year-ago quarter, due mainly to decreased activity levels and lower maintenance fees for the canola and pea patent portfolios. During fiscal 2022 second quarter, Burcon allocated $172,000 of IP expenses to deferred costs.
At September 30, 2021, cash balances totaled $10.9 million compared to $14.0 million at March 31, 2021. Management believes it has sufficient resources to fund its expected level of operations and working capital requirements to May 2023. This estimate does not take into account potential proceeds from outstanding convertible securities or royalty revenues from its license agreement.
Burcon will hold an investor conference call and webcast on Monday, November 15, 2021 at 5:00pm ET.
Investors interested in participating in the live call can dial in using the details below:
Date: Monday November 15, 2021
About Burcon NutraScience Corporation
Burcon is a global technology leader in the development of plant-based proteins for foods and beverages. With over two decades of experience formulating high-purity proteins that have superior functionality, taste and nutrition, Burcon has amassed an extensive patent portfolio covering its novel plant-based proteins derived from pea, canola, soy, hemp, sunflower seed, among other plant sources. In 2019, Merit Functional Foods Corporation ("Merit Foods") was established between Burcon and three veteran food industry executives. Merit Foods has since built a state-of-the-art protein production facility in Manitoba, Canada that is producing, under license from Burcon, best-in-class pea and canola proteins for the food and beverage industries. For more information, visit www.burcon.ca.
Forward-Looking Information Cautionary Statement
16.11.2021 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.